1
LOYOLA COLLEGE (AUTONOMOUS), CHENNAI 600 034
M.Com.DEGREE EXAMINATION COMMERCE
SECONDSEMESTER APRIL 2018
CO 2814- ACCOUNTING FOR DECISION MAKING
Date: 17-04-2018 Dept. No. Max. 100 Marks
Time: 01:00-04:00
PART-A
Answer ALL questions. (10 x 2 20)
1. What are the uses of Cash Flow Analysis?
2. Mention the advantages of Budgetary Control System
3. How do standard costs differ from estimated costs?
4. Why is ABC better than the traditional Costing?
5. State limitations of Ratio Analysis.
6. P.V. ratio is 60%. Marginal cost is Rs. 50. What is the selling price per unit?
7. Calculate fixed cost and variable cost per unit from the following table:
Particulars
70% capacity(7,000units)
90% capacity(9,000 units)
Repair maintenance
Rs. 1,900
Rs. 2,100
8. Explain the reasons for applying the Relevant Costing
9. 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.
10. Mention the objectives of Transfer Pricing
PART B Answer any FIVE questions. x 8 40 Marks)
11a) Explain the concept of Transfer Pricing in detail.
11b) Discuss the methods and area of application on Transfer Pricing.
12. "Marginal costing is a valuable aid for Managerial Decisions" Discuss.
13. What do you understand by Ratio Analysis? Examine its significance and utility.
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
2
Prepare a budget for production of 6,000 units and assume that administration expenses are fixed for all levels of production.
15. From the following details, calculate funds from operations:
Rs.
Rs.
Salaries
Rent
Refund of tax
Profit on sale of building
Depreciation on plant
Provision for tax
Loss on sale of plant
Closing balance of Profit Loss a/c
Opening balance of Profit Loss a/c
10,000
2,000
10,000
1,000
7,000
5,000
3,000
40,000
15,000
Discount on issue of debentures
Provision for bad debts
Transfer to general reserve
Preliminary expenses written off
Goodwill written off
Proposed dividend
Dividend received
1,000
2,000
4,000
5,000
4,000
5,000
2,000
16. From the following particulars pertaining to assets and liabilities of a company calculate Current ratio Liquid ratio Proprietary ratio Debt-Equity ratio Capital Gearing ratio.
Liabilities
Rs.
Assets
Rs.
5,000 Equity shares of
Rs. 100 each
2,000 Preference
shares of Rs. 100 each
4,000 Debentures
of Rs. 100 each
Reserves
Creditors
Bank overdraft
5,00,000
2,00,000
4,00,000
3,00,000
1,50,000
50,000


Land and Building
Plant and Machinery
Stock
Debtors
Cash and bank
Pre-paid expenses
6,00,000
5,00,000
2,40,000
2,00,000
55,000
5,000
16,00,000

17. From the following details prepare balance sheet.
Long term loans Rs.50,000
Working Capital Rs.50,000
Reserves to Capital 1:2
Current Ratio 2 times
Liquid Ratio 1.4 times
Fixed asset to propriety ratio 0.6
There are no fictitious or intangible assets.
18. From the following information compute material variances.
Standard Actual
Quantity Unit Quantity Unit
Kilos) Price Total (Kilos) Prices Total
Rs. Rs. Rs. Rs.
Material A 10 2 20 5 3 15
3
Material B 20 3 60 10 6 60
Material C 20 6 120 15 5 75
Total 50 4 200 30 5 150
PART-C Answer any TWO questions. x 20 40)
19. The following particulars are obtained from costing records of a factory:
Product A
(per unit)
Rs.
Product B
(per unit)
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.
20. Following are the comparative balance sheets of Cheran Company Ltd.
Liabilities
31-12-93
Rs.
31-12-94
Rs.
Assets
31-12-93
Rs.
31-12-94
Rs.
Share capital
Debentures
Accounts payable
Provision for doubtful debts
P L A/c
Bank overdraft
70,000
12,000
10,360
700
10,040

1,03,100
74,000
6,000
11,840
800
10,560
2,800
1,06,000
Bank Balance
Accounts receivable
Stock in trade
Buildings
Goodwill
9,000
14,900
49,200
20,000
10,000
1.03,100

17,700
42,700
40,600
5,000
1,06,000
Additional Information:
Buildings were acquired for Rs. 20,600
Amount provided for amortisation of goodwill totalled Rs. 5,000.
Dividends paid totalled Rs. 3,500.
Debenture loan repaid was Rs. 6,000.
Explain how the overdraft of Rs. 2,800 as on 31st Dec. 1994 has arisen and prepare Cash Flow Statement as per AS-3.
21. A gang of workers normally consists of 30 men, 15 women and 10 boys. They are paid at standard hourly rates as under:
4
Men Rs.0.80
Women Rs.0.60
Boys Rs.0.40
In a normal working week of 40 hours, the gang is expected to produce 2,000 units of output. During the week ended 30th September 2009, the gang consisted of 40 men, 10 women and 5 boys. The actual wages paid were Rs.0.70, Re. 0.65 and Re.0.30 respectively. 4 hours were lost due to abnormal idle time and 1,600 units were produced.
Calculate wage variance, wage rate variance, labour efficiency variance, labour idle time variance and gang composition variance (i.e. labour mix variance).