Roll No:
Final Examination 2021-22
Management Accounting
[Time: 2 Hours] [Maximum Marks : 60]
Note: Attempt all Questions. Attempt any TWO PARTS from each question.
All questions carry equal marks
Q 1 (A) Philips company Pvt. Ltd manufactures 2 products, Lights and Fans using common facilities. The
following cost data for a month are presented to you:
Lights Fans
Units produced 1000 2000
Direct Labour hours per unit 2 3
Machine hours per unit 6 1.5
Set-up machines 15 50
Orders 18 70
Machine Activity expenses Rs 300000
Set up related expenses Rs 30,000
Expenses relating to orders Rs 35,000
Calculate the overheads per unit absorbed using Activity based costing approach
(B) The following data is given :
Selling price Rs 20 per unit
Variable manufacturing costs Rs 11 per unit
Variable selling costs Rs 3 per unit
Fixed factory overheads 5,40,000 per year
Fixed selling costs 2,52,000 per year
You are required to compute:
(i) Break-even point expressed in amount of sales in rupees;
(ii) Number of units that must be sold to earn a profit of Rs 60,000 per year
(iii) How many units must be sold to earn a net income of 10% of sales?
(C) Calculate Margin of safety in each of the following cases:
(i) Break even point 40%, Actual Sales Rs 40,000
(ii) Actual Sales – 40,000 units, Break even point – 15,000 units
(iii) Breakeven point – 75 %
(iv) P/V Ratio 40 %, Profit – Rs 35,000
(v) Contribution per unit Rs 20, Profit Rs 15,000
Q 2 (A) What do you understand by Responsibility Centre? Also list down and explain different
types of Responsibility Centres.
(B) What is meant by Break even analysis. Discuss assumptions of this technique.
(C) State the distinction between marginal cost and absorption cost as regards valuation of finished
goods inventories. Also describe limitations of marginal cost.
Q 3 (A) Rodger Ltd has three division P, Q and R. The operating results are as follows:
Divisions X Y Z
Sales 5,00,000 5,00,000 10,00,000
Less : Cost 4,00,000 3,00,000 6,00,000
Profit 1,00,000 2,00,000 4,00,000
Investment 3,00,000 5,00,000 15,00,000
You are required to determine ROI of the three divisions and rank these divisions on the basis of their
performance.
Determine Residual Income (RI) of three divisions and rank them assuming cost of capital is 15%.
(B) The following is the standard cost data per unit of product Z:
Selling Price Rs 40
Direct material Rs 8
Direct Labour Rs 5
Variable factory overhead Rs 2
Fixed factory overhead Rs 5 (based on a budgeted normal output of 36,000 units per year ).
Variable Selling overhead Rs 6
Fixed selling overhead per year were Rs 1,20,000
During a month the company produced 2,000 units of the product and sold 1500 units. There was no
opening stock. You are required to prepare an income statement under Variable costing.
(C) In a department of a plant, the following data is submitted for the week ending :
Standard output for 40 hours per week 1400 units
Budgeted fixed overhead Rs 1400
Actual output 1200 units
Actual hours worked 32
Actual Fixed overhead Rs 1500
Calculate Overhead variances (F.O. Cost variance, F.O. Expenditure variance, Volume variance,
Efficiency variance, Capacity variance)
Q 4 (A) Write the advantages and limitations of Standard Costing. Also write about the preliminaries
in establishing a system of standard costing.
(B) Write short notes on: (i) Zero base Budgeting (ii) Master Budget (iii) Budget reports
(C) What is meant by Differential cost Analysis? Explain the essential features of Differential
costing.
Signature of Moderation Committee
