Hall Ticket No Question Paper Code: CMB405
INSTITUTE OF AERONAUTICAL ENGINEERING
(Autonomous)
MBA III Semester End Examinations (Regular) November, 2018
Regulation: IARE-R16
Stratgic Management Accounting

Time: 3 Hours Max Marks: 70
Answer ONE Question from each Unit
All Questions Carry Equal Marks
All parts of the question must be answered in one place only
UNIT I
1. Limitations of Financial Accounting have made the Management realize the importance of Cost
Accounting' Comment.
PH Ltd. is a manufacturing company having three production departments, B and C and two
service departments X and Y. The following is the budget for March 2004.
Table 1
Total A B C X Y
Direct Material 1000 2000 4000 2000 1000
Direct Wages 5000 2000 8000 1000 2000
Factory rent 4000
Power 2500
Depreciation 1000
Other overheads 9000
Additional information
Area (Sq.ft) 500 250 500 250 500
Capital value of assets (Rs. In lakhs) 20 40 20 10 10
Machine hours 1000 2000 4000 1000 1000
Horse power of machines 50 40 20 15 25
A technical assessment of the apportionment of expenses of service departments is as under:
Required: A statement showing distribution of overheads to various departments. Also show
the redistribution of service departments expenses to production departments. Use repeated
distribution method.
Page 1 of 5
Table 2
A B C X Y

Service Department X 45 15 30 10
Service Department Y 60 35 5
2. Briefly explain different methods of costing.
Compute Machine Hour Rate from the following:
i. Working hours for a month 160 hours
ii. Cost of machine Rs.12000
iii. Estimated scrap value Rs. 3000
iv. Estimated working life of the machine 10000 hours
v. Repairs and maintenance per month Rs.120
vi. Standing charges per month Rs.40
vii. Power used 5 units per hour
viii. Power per unit 10 paise.
UNIT II
3. The following extracts of costing information relate to commodity of X for the year ending
31.12.2013

Table 3
Purchase of Raw materials Rs.6500 Direct wages Rs.5000
Rent, Rates and Insurance Rs.2000 Carriage inwards Rs.100
Stock(1.1.2013) Stock(31.12.2013)
Raw materials Rs1000 Raw materials Rs.1100
Finished Goods-200 units Rs.800 Finished Goods-400 units
Cost of Factory supervision Rs.400 Sale of Finished Goods Rs.15000
Advertising and selling cost is 40 paise per ton sold, 3000 tons of the commodity were sold during
the year. Prepare a Cost sheet.
What is fixed cost? What is its role in management decision making?
4. 'What is Process costing? Explain the Advantages Disadvantages of process costing.
Rama industries Ltd., has three processes through which its products pass for becoming a finished
product. There is a loss of in each process on the total weight put in and 10% is scrap in all
processes. The scrap realises Rs.5 per ton from process Rs.7 per ton from process 2 and Rs.
10 per ton from process 3. The detailed information of various processes is as follows:

Prepare process cost accounts showing cost per ton at each process.
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Table 4
Particulars Process 1 Process 2 Process 3
Passed to next process 60% 50%
Sent to warehouse for sale 40% 50% 100%
Rs. Tons Rs. Tons Rs. Tons
Raw Materials 150000 500 24480 136 7200 24
Labour cost 27500 20600 15000
General expenses 12500 9200 5075
UNIT III
5. Define break even analysis. Describe the advantages of break even analysis.
Following information has been made available from the cost records of United Automobiles Ltd.,
manufacturing spare parts.
Table 5
Direct Materials Per Unit
X Rs.8
Y Rs.6
Direct Wages
X 24hours at 25 paise per hour
Y 16 hours at 25 paise per hour
Variable overheads 150% of wages
Fixed Overheads Rs.750
Selling price
X Rs.25
Y Rs.20
The directors want to be acquainted with the desirability of adopting any one of the following
alternative sales mixes in the budget for the next period
i. 250 units of X and 250 units of Y
ii. 400 units of Y only
iii. 400 units of X and 100 units of Y
iv. 150 units of X and 350 units of Y
State which of the alternative sales mixes you would recommend to the management.
6. "Marginal costing is essentially a technique of cost analysis and cost presentation" Discuss the
statement with reference to the merits and limitations of marginal costing.
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The following are the data related to XYZ Co.,
Normal capacity 40000 units per month.
Variable cost per unit Rs.6
Actual production 44000 units
Sales =40000 units Rs. 15 per unit
Fixed manufacturing overheads= Rs.100000 per month or Rs. 2.50 per unit normal capacity.
Other fixed expenses Rs. 240000 per month
Compute Net profit under absorption costing.

UNIT IV
7. Explain in detail the classification of budgets according to Functions and flexibility
The expenses budget for production of 10000 units in a factory is given below:
Table 6
Particulars Per unit
Materials Rs.70
Labour Rs.25
Variable Overheads Rs.20
Fixed Overheads Rs. 10(Rs.100000 fixed)
Direct Variable Expenses Rs.5
Selling Expenses Rs.13(10% fixed)
Distribution Expenses Rs.7 fixed)
Administrative Expenses Rs.5 (Rs. 50000 fixed)
Total Rs.155
Prepare a flexible budget for production of 6000 and 8000 units. Fixed Overheads and Administrative
expenses are fixed for all levels of production.
8. Briefly discuss the advantages of Budgetary Control.
Pranav engineering company ltd. manufactures product Z. An estimated of the number of units
expected to be sold in the first seven months of 2002 is given below:
Table 7
Months Jan Feb march April may June July
Sales (units) 600 800 1000 1200 1200 1000 1500

It is anticipated that, there will be no work-in progress at the of any month and finished units
equal to half the anticipated sales for the next month will be in stock at the end of the each
month (including December 2001). You are required to prepare a production budget showing the
number of units to be manufactured each month from January to June 2002.
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UNIT V
9. The standard material required manufacture one unit of product X is 10kgs and the standard
price per kg of material is Rs. 25. He cost accounts records, however, reveal that 11,500kgs of
material costing 2,76,000 were used for manufacturing 1,000units of product X. calculate material
Cost variances, Material price variance and Material usage variance.
Explain the different stages of standard costing system.
10. Form the following particulars, calculate all material variances.
Table 8
Material Standard Actual
Qty in kg Price in Rs. Qty in kg Price in Rs.
A 10 8 10 7
B 8 6 9 7
C 4 12 5 11
22 24
Explain the features, merits and limitations of Standard Costing.
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