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Course Code: 21PCM2C05

SRI VIDYA MANDIR ARTS & SCIENCE COLLEGE
(Autonomous)
Katteri – 636 902, Uthangarai, Krishnagiri District, Tamil Nadu
(An Autonomous College Affiliated to Periyar University, Salem)
(Recognized under Status 2(f) & 12(B) of the UGC Act 1956)
(Accredited by NAAC with ‘A’ Grade [3.27/4.00])

PG AND RESEARCH DEPARTMENT OF COMMERCE

Revision Examinations – January - 2023
Programme : I M.com
Accounting for Managerial Decision
Time: Three hours Maximum marks: 75

SECTION – A
Answer All Questions (15 x 1= 15)
1. Management accounting deals with

(a) Quantitative information (b) Qualitative information

(c) Both a and b (d) None of the above

2. Interpretation of accounts is the

(a) Art and science of translating the figures
(b) To know financial strengths and weaknesses of a business
(c) To know the causes for the prevailing performance of business
(d) All of the above
3. Trend analysis is significant for

(a) Profit planning (b) Working Capital management

(c) Capital rationing (d) Forecasting and Budgeting.

4. Which of the following are techniques, tools or methods of analysis and
interpretation of financial statements?

a) Ratio Analysis b) Average Analysis

c) Trend Analysis d) All of the above

5. ________ is the relationship between quick assets and current

liabilities.

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a) Current ratio b) Absolute liquidity ratio
c) Acid test ratio d) Proprietary ratio
6. Given Sales is 1, 20,000 and Gross Profit is 30,000, the gross profit
ratio is
a) 24% b) 25%
c) 40% d) 44%
7. Given Net profit for the year Rs 2, 50,000 Transferred to general
reserves Rs 40,000 and old machinery bought for Rs 50,000 was sold for
Rs 20,000. Calculate funds from operations.
a) Rs 2, 80,000 b) Rs 2, 20,000
c) Rs 2, 90,000 d) Rs 3, 00,000
8. Statement of cash flows includes
a) Financing Activities b) Operating Activities
c) Investing Activities d) All of the Above
9. In cash flows, when a firm invests in fixed assets and short-term
financial investments results in
a) Increased Equity b) Increased Liabilities
c) Decreased Cash d) Increased Cash
10. Budgeting is

a) A technique b) A method of costing

c) Maintaining ledger accounts d) None of the above
11. The main objective of budgetary control is -

a) To define the goal of the firm b) To coordinate different

departments
c) To plan to achieve its goals d) All of the above
12. Production budget is -

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a) Dependent on purchase budget b) Dependent on sales budget

c) Dependent on cash budget d) None of the above

13. Which of the following is a purpose of standard costing?

(a) To determine profit at different levels
(b) To determine break-even production level
(c) To control costs
(d) To allocate cost with more accuracy

14. While computing variances from standard costs, the difference

between the actual and the standard prices multiplied by the actual
quantity yields a
(a) Yield variance
(b) Volume variance
(c) Mix variance
(d) Price variance

15.The labour cost variance may be expressed as

(a) Budgeted labour cost – Actual labour cost

(b) (Standard wage rage x Output achieved) – Actual wage cost

(c) (Standard hours – Actual hours) x Actual wage rate

(d) (Standard hours – Actual hours) x Standard wage rate

SECTION – B

Answer any THREE questions. (3 × 5 = 15 Marks)

16. Explain the objectives of management accounting.

17. The following information of a company is given:

Current ratio 2.5: 1, Acid –test ratio 1.5: 1, current liabilities

Rs 50,000.

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Find out:

i) Current Assets
ii) Liquid Assets
iii) Inventory.
18. Calculate funds from operations from the following Profit & loss A/c

Profit & Loss A/c

Particulars Rs Particulars Rs

To Expenses paid 3,00,000 By Gross profit 4,50,000

To Depreciation 70,000 By Gain on sale of 60,000

land
To Loss on sale of 4,000
machine
200
To Discount
20,000
To Good will
1,15,800
To Net profit

5,10,000 5,10,000

19. The sales director of a manufacturing company reports that next year
he expects to sell 40,000 units of a particular product. The production
department gives the following particulars.

Two kinds of raw materials A and B are required for

manufacturing the product. Each product requires 3 units of material A and
2 units of material B – 15,000 units.

Finished product: 10,000 units; Material A -12,000 units; Material B -

15,000 units.

The desirable closing balances at the end of the year are:

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Finished product -16,000 units: material A – 14,000 units: Material B –
15,000 units.

Draw up materials purchase budget.

20. Calculate Labour cost variance from the information: Standard

production : 100 units
Standard Hours : 500 hours
Wage rate per hour : Rs. 2
Actual production : 85 units

Actual time taken : 450 hours

Actual wage rate paid : Rs. 2.10 per hour

SECTION – C

Answer ALL THE Questions (5 x 9= 45)

21. (a) Distinguish Management Accounting with Financial Accounting.

(OR)

(b) Explain the techniques of analysis and interpretation of

accounting.

22. From the following information make out a statement of proprietor’s

fund with as many details as possible:

a) Current Ratio 2.5

b) Liquidity Ratio 1.5

C) Proprietary ratio ( Fixed assets/ Proprietary fund) 0.75

d) Working capital Rs.60,000

e) Reserve and surplus Rs.40,000

f) Bank overdraft Rs.10,000

g) There is no long term loan or fictitious assets.

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(OR)

(b) A ltd sells goods on cash as well as on credit basis .the following
information is extracted from their books of accounts for 1993

Rs

Total sales 1, 00,000

Cash sales 20,000

Total debtors for sales as on 31.12.93 9,000

Bills receivable as on 31.12.93 2,000

Provision for doubtful debts 1,000

Trade creditors as on 31.12. 93 10,000

You are required to Calculate

1) Debtors /Receivable turnover ratio;

2) The average collection period

23. (a) ) From the following balance sheets of a company for the
years 1989 and 1990.

Balance Sheets

Liabilities 1989 1990 Assets 1989 1990

Rs Rs Rs Rs

Share 70,000 74,000 Cash 9,000 7,800

Capital
12,000 6,000 Debtors 14900 17,700
Debentures
10,360 11,840 Stock 49,200 42,700

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Creditors 10740 11,360 Land 20,000 30,000

Profit and Goodwill 10,000 3,000

Loss A/c

1,03,100 1,03,200 1,03,100 1,03,200

Additional Information:

a) Dividends were paid totaling Rs 4,000

b) Land was purchased for Rs 15,000
You are required to prepare a statement showing changes in
working capital and a funds flow statement

(OR)

(b) From the following summarized balance sheet of a company.

Prepare Cash flow statement.

Liabilities 2005 2006 Assets 2005 2006

Share 2,00,000 2,50,000 Building 2,00,000 1,90,000

capital
50,000 60,000 Machinery 1,50,000 1,69,000
General
Reserve Stock 1,00,000 79,000

P &L a/c 30,500 30,600 Debtors 80,500 64,200

Long term 70,000 - Cash _ 8,600

loan ,50,000 1,35,200
Creditors 30,000 35,000
Provision
for
Taxation

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5,30,500 5,10,800 5,30,500 5,10,800

Additional information:

a) Dividend paid Rs 23,000

b) Purchase of Machinery Rs 38,000
c) Depreciation written off on machinery Rs 12,000
d) Income tax provided in the year 33,000
e) Loss on sale of machinery Rs 1,200 written off to general
Reserve

24. (a) From the following data forecast the cash position at the end
of April to June 1998.

Month Sales Purchase Wages Selling

Expenses

Feb 1,20,000 80,000 10,000 7,000

Mar 1,30,000 98,000 12,000 9,000

Apr 70,000 1,00,000 8,000 5,000

May 1,16,000 1.03,000 10,000 10,000

June 85,000 80,000 8,000 6,000

Further Information:

i) Sales at 10% realized in the month sales. Balance equally

realized in 2 month subsequent months.
ii) Purchases: Creditors are paid in the month following the

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month of supply.
iii) Wages: 20% paid in arrears in the following month.
iv) Income tax of Rs. 20,000 payable in June.
v) Dividend Rs.12, 000 Payable in June.
vi) Income from investment Rs.2, 000 received half yearly in
March and September.
vii) Cash balance on hand as on 1.4.1998 Rs. 40,000.
(OR)

(b) The Expenses budgeted for production of 10,000 Units in factory is

furnished below. Per Unit

Rs.

Materials 70

Labour 25

Variable Overhead 20

Fixed Overhead (Rs.1, 00,000) 10

Variable Expenses (Direct) 5

Selling expenses (10% Fixed) 13

Distribution Expenses (20% Fixed) 7

Administration Expenses (50000) 5

(Fixed for all levels)

Total Cost per Unit (to make and sell) 155

Prepare a flexible budget for the production of (a) 8,000 Units

and (b) 6,000 Units.

25. (a) A manufacturing concern, which has adopted standard costing,

furnished the following information:
Standard Material for 70 kg finished

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Sl. No. Course Code: 21PCM2C05
product: 100 kg. Price of materials:
Re. 1 per kg.
Actual Output: 2,10,000 kg.
Material used: 2,80,000 kg.
Cost of material: Rs. 2,52,000.
Calculate:
(a) Material Usage Variance (b) Material Price Variance (c) Material
Cost Variance
(OR)

(b) From the following particulars calculate:

(a) Material Cost Variance

(b) Material Price Variance
(c) Material Usage Variance
(d) Material Mix Variance
The Standard Mix of Product is :

X 300 Units at Rs. 7.50 per unit Y 400 Units at Rs. 10 per unit
Z 500 Units at Rs. 12.50 per unit
The Actual Consumption was :
X 320 Units at Rs. 10 per unit Y 480 Units at Rs. 7.50 per unit
Z 420 Units at Rs. 15 per unit

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