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LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
M.Com.DEGREE EXAMINATION -COMMERCE
FIRST SEMESTER APRIL 2018
17/16PCO1MC04- ACCOUNTING FOR DECISION MAKING
Date: 30-04-2018 Dept. No. Max. 100 Marks
Time: 09:00-12:00
PART-A
Answer ALL questions. (10 x 2 20)
01. Write a note on the term Zero Base Budgeting (ZBB).
02. What are essentials of a Budget?
03. Mention the uses of Cash Flow Analysis.
04. What are the objectives of financial statement analysis?
05. What are the advantages of Standard Costing?
06. Explain the reasons for applying the Relevant Costing.
07. P.V. ratio is 60%. Marginal cost is Rs. 50. What is the selling price per unit?
08. Product X requires 20 kgs. of material at Rs.4per kg. The actual consumption of material for the manufacturing of product X came to 24 Kgs. of material at Rs.4-50 per kg.
Calculate Material Cost Variance Material Price Variance.
09. Calculate the EarningPer Share from the following data:
Net Profit before tax Rs.50,000; Tax rate 50%
10% Preference share capital (Rs.10 each) Rs.50,000
Equity Share Capital (Rs.10 each) Rs.50,000.
10. Calculate fixed cost and variable cost per unit from the following table:
Particulars
70% capacity(7,000 units)
90% capacity(9,000 units)
Repair maintenance
Rs. 1,900
Rs. 2,100
PART B
Answer any FOUR questions. x 10 40 Marks)
11a) Explain the concept of Transfer Pricing in detail.
Discuss the methods and area of application on Transfer Pricing.
12. "Marginal costing is a valuable aid for Managerial Decisions" Discuss.
13. From the following the Balance sheet prepare a Fund Flow Statement for 2017.
Balance Sheets of Sree Ganesh Ltd., as on 31st December
Liabilities
2016
2017
Assets
2016((Rs.)
2017(Rs.)
Share capital
Reserves
P& L account
Debentures
Creditors
Provision for tax
6,00,000
50,000
40,000
3,00,000
1,70,000
60,000
6,00,000
1,80,000
65,000
2,50,000
1,60,000
80,000
Fixed Assets
Depreciation
Stock
Book debts
Cash and Bank
Preliminary Exp
10,00,000
3,70,000
6,30,000
2,40,000
2,50,000
80,000
20,000
11,20,000
4,60,000
6,60,000
3,70,000
2,30,000
60,000
15,000
12,20,000
13,35,000
12,20,000
13,35,000
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14. The expenses for budgeted production of 10,000 units in a factory are furnished below:
Per Unit
Rs.
Material 70
Labour 25
Variable Overheads 20
Fixed Overheads Rs.1,00,000) 10
Variable Expenses (Direct) 5
Selling Expenses Fixed) 13
Distribution Expenses Fixed) 7
Administration Expenses 5
Total Cost per unit 155
Prepare a budget for production of 6,000 units and assume that administration expenses are fixed for all levels of production.
15. X Ltd, has been approached by a customer who would like a special job to be done for him and is
willing to pay Rs.22,000 for it. The job would require the following materials:
Material
Total Units Required
Units already in Stock
Book Value of Units in Stock Rs./ Unit
Realizable Value Rs./Unit
Replacement cost Rs./Unit
A
1000
Nil


60
B
1000
600
20
25
50
C
1000
700
30
25
40
D
200
200
40
60
90
Material B is used regularly by X Ltd. And if stocks are required for this job, they may need to be replaced to meet other production demand.
Materials C and D are in Stock as the result of previous excess purchase and they have a restricted use. No other use would be found for material C but Material D could be used another job as substitute for 300 Units of Material which currently costs Rs.50 per Unit (of which the company has no units in stock at the moment).
What are the relevant costs of material, in deciding whether or not to accept the job? All other expenses on this job are to be specially incurred. The relevant cost of other material is Rs.5,500.
16. Calculate all material variances from the following particulars.
Standard Actual
Material Qty.Price Total Qty. Price Total
Kg.Rs. Rs. kg. Rs. Rs.
A 500 6.00 3,000 400 6.00 2,400
B 400 3.75 1,500 500 3.60 1,800
C 300 3.00 900 400 2.80 1,120
1200 1300
Less 10%
Normal Loss 120 220
1080 5,400 1,080 5,320
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17. From the following data, calculate Labour cost variance 2. Rate variance 3. Efficiency
variance 4. Mix variance 5. Labour sub efficiency variance.
Standard Actual
Hours Rate Hours Rate
Skilled labour 10 3.00 9,000 4.00
Semi skilled 8 1.50 8,400 1.50
Un skilled 16 1.00 20,000 0.90
The actual production was 1000 articles.
PART-C Answer any ONE question. x 17 17)
18. The following particulars are obtained from costing records of a factory.
Product A Product B
Per unit (Per unit
Rs. Rs.
Selling price 200 500
Material Rs. 20 per kg.) 40 160
Labour( Rs. 10. per hour 50 100
Variable overhead 20 40
Total fixed overheads Rs. 15,000
Comment on the profitability of each product when
Raw material is in short supply
Production capacity is limited
Sales quantity is limited
Sales value is limited
Only 1,000 kgs. of raw material is available for both type of products in total and maximum sales quantity of each product is 300 units.
19. From the following particulars, construct the Balance Sheet of Y Ltd., as on 31st December 2017.
Fixed assets Rs.10,50,000. Fixed assets turnover ratio 2.
Stock turnover ratio Gross profit ratio 25%
Net profit (before interest) ratio
Fixed charges cover (Debenture interest 8
Debt collection period 45 days;
Materials consumed to sales 30%
Stock of raw materials 8 months consumption;
Current ratio 2.4; Quick ratio
Reserves and Surplus to Share capital 0.20
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20. ABC Company Ltd. has given the following particulars. You are required to prepare a cash budget for the three months ending 31st December 1999:
Months Sales Materials Wages Overheads
Rs. Rs. Rs. Rs.
August 20,000 10,200 3,800 1,900
September 21,000 10,000 3,800 2,100
October 23,000 9,800 4,000 2,300
November 25,000 10,000 4,200 2,400
December 30,000 10,800 4,500 2,500
b)Credit terms are
Sales Debtors 10% sales are on cash basis, 50% of the credit sales are collected next month and the balance in the following month.
Creditors Materials 2 months
Wages 1 5 month
Overheads 1 2 month
Cash balance on 1st October, 1999 is expected to be Rs.8,000.
A machinery will be installed in August, 1999 at a cost of Rs.1,00,000. The monthly installment of
Rs.5,000 is payable from October onwards.
Dividend at 10% on preference share capital of Rs.3,00,000 will be paid on 1st December, 199.
Advance to be received for sale of vehicle Rs.20,000 in December.
Income tax (advance) to be paid in December Rs.5,000.
PART- D Compulsory Question x 23 23)
21. Prepare Cash flow Statement as per As 3 from the following balance sheets
Liabilities
31/03/17
Rs.
31/03/18
Rs.
Assets
31/03/18
Rs.
30/03/18
Rs.
Share capital
P L A/c
Capital Reserve
Bank Loan
Creditors
Provision for Tax
Proposed Dividend
Provision for Doubtful debts
2,00,000
50,000
Nil
Nil
10,000
15,000
25,000
2,000 3,02,000
2,50,000
1,00,000
18,000
20,000
21,000
18,000
20,000
3,000
4,50,000
Land& Buildings
Plant
Investment
Goodwill
Stock
Debtors
Bills Receivable
Cash
80,000
60,000
20,000
40,000
55,000
30,000
10,000
7,000
3,02,000
80,000
68,000
32,000
30,000
1,00,000
75,000
50,000
15,000
4,50,000
Land building were purchases for Rs. 40,000. Profit on sale of land was transferred to capital reserve.
Investment Rs. 10,000 was sold at a loss of Rs. 2,000 and loss on sale was adjusted against capital reserve.
Investment purchased and interest received Rs. 3,000 was used in writing down book value of investment.
Bad debts written off during the year Rs. 1,000 against provision account.
Stock of 2014 was valued 10% above cost.
A loan of Rs. 28,000 was raised during 2017-2018