NRJ/KW/17/6359

Master of Business Administration (M.B.A.) (CBS) Semester—II (New) Examination

COST AND MANAGEMENT ACCOUNTING
Compulsory
Time : Three Hours] [Maximum Marks : 70
N.B. :— (1) Question No. 1 is compulsory.
(2) Attempt any FIVE questions from question nos. 2 to 10.
(3) Solve the questions as per the instructions given below.
Question No. 1 :—
Note :— (1) Attempt any TEN questions from Question No. 1.
(2) Write each answer in 30 words approximately.
(3) All questions carry 2 marks each.
1. (a) Define cost, costing and Cost Accounting.
(b) Write down the meaning and features of variable cost.
(c) What do you mean by Direct and Indirect labour cost ?
(d) What do you mean by Escalation clause of contract ?
(e) List out the objectives of Budgetary control.
(f) List out the components of Current Ratio and Acid Test Ratio.
(g) Point out the limitations of Management Accounting.
(h) Given : BEP Rs. 4,00,000, Percentage of marginal cost to sales is 60%. Find out fixed cost.
(i) Explain the meaning of stock turnover ratio.
(j) Yatra Travels operates and runs two buses between two towns which are 150 kms apart. The
seating capacity of each bus is 50 passengers. Each bus makes two round trips daily carrying
on an average 80% of seating capacity. The buses generally operate 25 days in a month.
Calculate total passenger kms.
(k) Define the terms ‘‘work certified’’ and ‘‘work uncertified’’.
(l) Explain the term cost centre.
(m) What is ‘Sunk Cost’ ?
(n) Define Marginal Costing.
(o) What do you mean by the term ‘Production Budget ?
Note :— Attempt any FIVE questions from question no. 2 to question no. 10. All questions carry
10 marks each.
2. The following is the Trading and P&L A/c of Bright Ltd. for the year ended 31st March 2013 :—
Particulars Amt. Particulars Amt.
To Materials 7,08,000 By Sales 15,00,000
Consumed (3,00,000 units)
To Direct wages 3,71,000 By Finished
To Works Overheads 2,13,000 Stock (1,000 units) 40,000
To Administration By Work in-
Overheads 95,500 progress
To Selling and Material 17,000
Distribution O.H. 1,13,500 Wages 8,000
To Net Profit 69,000 Works O.H. 5,000 30,000
15,70,000 15,70,000
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 Manufacturing a standard unit, the company’s cost records show that :—
(1) Works overheads have been charged @ 20% on combined cost of material and wages.
(2) Administration overheads have been recovered at Rs. 3 per finished unit.
(3) Selling and distribution overheads have been recovered at Rs. 4 per unit sold.
You are required to prepare :—
(a) Statement of cost showing profit or loss
(b) A statement reconciling profit as disclosed by cost accounts and that shown in financial
accounts.
3. The following is the summary of the entries in a Contract Ledger of Concrete Constructions as on 31st
Dec. 2014 :—
Partculars Amount
Material brought 3,50,000
Material from stores 70,000
Wages 1,80,000
Direct expenses 70,000
Establishment Expenses 80,000
Plant purchased 3,42,000
Scrap sold 18,000
Additional Information :—
(1) Outstanding wages and direct Exp. as on 31st Dec. 2014 Rs. 9,000/- & Rs. 12,000 resp.
(2) The Cost of work uncertified Rs. 51,000/–
(3) Rs. 20,000 worth of plant and Rs. 30,000 worth of material were destroyed by fire.
(4) Rs. 40,000 worth of plant was sold for Rs. 30,000 and Material costing Rs. 25,000 was sold
at a profit of Rs. 10,000/-
(5) Depreciation on plant up to 31st Dec. 2014 Rs. 20,000/-
(6) Material remained at site Rs. 25,000/-
(7) The contract price was Rs. 12,00,000 and cash received from contractee Rs. 6,00,000 being
80% of work certified.
Prepare Contract Account.
4. Union Transport Company supplies you the following details in respect of a truck of 5 tonne capacity.
Cost of truck–Rs. 900,000, Estimated life 10 yrs, Diesel, Oil, Grease, Rs. 300/- per trip each
way, Repairs and maintenance Rs. 10,000 p.m., Drivers wages Rs. 10,000 p.m., Cleaner’s wages
Rs. 5,000 p.m; Insurance Rs. 9,600 p.a., Tax Rs. 4,800 p.a., General supervision charges Rs. 9,600 p.a.
The truck carries goods to and from the city covering a distance of 100 km. each way. In
outward trip freight is available to the extent of full capacity and on return 20% of capacity. Assuming
that truck runs on an average 25 days a month, work out :
(a) Operating Cost per tonne km.
(b) Rate per tonne per trip that the company should charge if a profit of 50% on freight is to be
earned.

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5. Given :— Debtor’s Velocity Ratio = 3 months, Creditor’s Velocity Ratio = 2 months,
Stock Velocity Ratio = 8 times, Fixed Assets Turnover Ratio = 8 times. Gross Profit Ratio = 25%.
Additional Information :— Gross Profit during the year amounted to Rs. 80,000. There are no
long term loans or overdraft. Reserves and Surplus amounted to Rs. 28,000/-. Liquid Assets are
Rs. 97,333. Closing Stock is Rs. 2,000 more than the Opening Stock. Bills Receivable and Bills
Payable are Rs. 5,000 and Rs. 2,000 resp. Find out :—
(a) Sales
(b) Debtors and Creditors
(c) Closing Stock
(d) Fixed Assets
(e) Proprietary fund.
Also make out Balance Sheet of the company with as much details as possible.
6. (A) The Asian Industries specialises in the manufacture of small capacity motors. The cost structure
of a motor is as under :— material Rs. 50, labour Rs. 80, variable overheads @ 75% of labour.
Fixed overheads amounted to Rs. 2,40,000. Selling price per motor is Rs. 230/-.
(1) Determine the number of motors that have to be manufactured and sold in order to Break
even.
(2) If the sale price is reduced by Rs. 15 each, how many motors to be sold to break even ?
(B) The following figures are extracted from the books of a manufacturing concern for the year 2013-14.
Direct material Rs. 2,05,000/-, Direct labour Rs. 75,000, Fixed Overheads Rs. 60,000/-, Variable
Overheads Rs. 1,00,000, Sales Rs. 5,00,000.
Calculate a) BEP and what will be the effect on BEP of an increase of 10% in Fixed expenses
and Variable expenses separately.
7. From the following information prepare flexible Budget for 70%, 80%, 95% and 100% Capacity
utilisation :
Particulars Amount
Variable Exp : Materials 12,00,000
(at 60%) Labour 13,00,000
Other Overheads 2,00,000
Semi-variable Exp : Repairs 1,25,000
(at 60%) Labour 5,00,000
Selling exp. 1,50,000
Other Overheads 1,25,000
Fixed Exp : Salaries and wages 4,20,000
Rent, Rates and Taxes 2,80,000
Depreciation 3,50,000
Misc. Exp. 4,50,000
Fixed expenses remain constant at all capacities. Semi variable exp. will remain constant between 55%
to 70% capacity. It will increase by 10% of the above capacity between 70% to 90% capacity. A
further increase of 5% is estimated between 90% to 100% capacity.

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8. Describe the different methods of costing and state the particular industries to which they can be
applied.
9. Discuss the meaning, importance and nature of Ratio Analysis.
10. Write notes on (any TWO) :—
(a) Zero base budgeting
(b) Importance of Marginal Costing as a tool of cost control.
(c) Quotations
(d) Difference between Cost Accounting and Management Accounting.

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