(6 pages) OCTOBER 2012

P/ID 77504/PMBD/ PMB1D

Maximum : 100 marks

Time : Three hours

PART A (5 6 = 30 marks) Answer any FIVE questions. All questions carry equal marks. 1. Explain the nature management accounting. and importance of

2. 3.

What is a trial balance? How is it prepared? Explain the significance of ratio analysis in decision making. What are the advantages of budgetary control? Describe the applications of capital budgeting. What is standard costing? Explain the elements of costing. Explain break-even illustration. analysis, with graphical

4. 5. 6.

7.

8.

What is meant by overheads? How are they classified?

PART B (5 10 = 50 marks) Answer any FIVE questions. All questions carry equal marks. 9. 10. 11. 12. Explain cash flow statement and its uses. Describe the preparation of a cash flow statement. What is budgeting? Evaluate the applications of different budgets in managing the business. Analyse the utility of marginal costing in the decision making of a firm. Following are the ratios of ACS Ltd. : Debtors velocity 3 months Stock velocity 8 months Creditors velocity 2 months Gross profit ratio 25% Gross profit for the year amounts to Rs. 4,00,000 Closing stock of the year is Rs. 10,000 above the opening payable to Rs. 10,000. Find out: (a) (b) (c) (d) Sales Sundry debtors Closing stock Sundry creditors. 2

P/ID 77504/PMBD/ PMB1D

13.

ZYX Ltd. is considering an investment proposal requiring a capital outlay of Rs. 4,00,000. Forecast for annual income after depreciation but before tax is as follows: Year Rs. 1 2,20,000 2 2,40,000 3 1,80,000 4 1,80,000 5 1,20,000 Depreciation may be taken at 20% on original cost and taxation at 50% of net income. Evaluate the project according to (a) Discounted cash flow method, taking cost of capital as 10% and (b) Return on original investment method.

14.

For manufacturing 15 kgs of a product, the standard materials required are : Materials : A : 12 kgs @ Rs. 10 B : 5 kgs @ Rs. 16 C : 3 kgs @ Rs. 20 In a month, 1500 kgs of the product were produced. The actual material consumption was as follows : Materials : A : 1100 kgs @ Rs. 12 B : 600 kgs @ Rs. 14 C : 450 kgs @ Rs. 18 Calculate material variances. 3

P/ID 77504/PMBD/ PMB1D

15.

A company is expecting to have Rs. 25,000 cash in hand on 1.4.2009. Prepare a cash budget for April to June 2011. Month Sales Purchases Wages Expenses (Rs.) (Rs.) 40,000 50,000 52,000 (Rs.) 8,000 8,000 9,000 (Rs.) 6,000 7,000 7,000 8,000 9,000

February March April May June

70,000 80,000 92,000 1,00,000 1,20,000

60,000 10,000 55,000 12,000

Other information : (a) (b) (c) (d) Period of credit allowed by suppliers 2 months. 25% of sales is for cash and credit period allowed to customers 1 month Lag in payment of wages and expenses 1 month Income tax Rs. 25,000 is to be paid in June 2011.

16.

A company budgets a production of 5 lakh units at a variable costs of Rs. 20 each. The fixed costs are Rs. 20 lakhs. The selling price is fixed to yield 25% on cost. Calculate : 4

P/ID 77504/PMBD/ PMB1D

[P.T.O.]

(a) (b)

P/V ratio Break even point If the selling price is reduced by 20%, find (i) (ii) the effect of the price reduction on the BEP and P/V ratio the number of units required to be sold at the reduced selling price to obtain an increase of 20% over the budgeted profit.

PART C (1 20 = 20 marks) (Compulsory) 17. Balance Sheet of Y Ltd., as on 1.1.2011 and 31.12.2011 was as follows : Balance Sheet
Liabilities 1.1.2011 31.12.2011 Rs. Creditors Loans from banks Capital 65,000 1,25,000 40,000 Rs. 44,000 Cash Debtors 50,000 Stock 1,53,000 Machinery Land Building 2,30,000 2,47,000 Assets 1.1.2011 31.12.2011 Rs. 10,000 30,000 35,000 80,000 40,000 35,000 2,30,000 Rs. 7,000 50,000 25,000 55,000 50,000 60,000 2,47,000

P/ID 77504/PMBD/ PMB1D

During the year, machine costing Rs. 10,000 (accumulated depreciation Rs. 3,000) was sold for Rs. 5,000. The provision for depreciation against machinery as on 1.1.2011 was Rs. 25,000 and on 31.12.2011 was Rs. 40,000. Net profit for the year 2011 amounted to Rs. 45,000. Prepare a funds flow statement.

P/ID 77504/PMBD/ PMB1D