Management Accounting 9mrQc9m4HB

SVKM'S NMIMS
ANIL SURENI)RA MODI SCHOOL OF COMME

Academic Year: 2019-2020
Program: B.Com. (Hons.)

Subject: Management Accounting Batch: 20
Date: 27th November, 2019 Time: |2'^]§b.pma-L` TZ[30 pin (2 hrs)
Marks: 50 No.of pages:Ji

Final Examination
1. All questions are compulsory

2. All types of calculators are allowed
3. Figurestothe right indicate full marks
Q)1) A Ltd. is using cme type of material & one grade of labour to produce product A & a.
Extract for the next period's budget is given below. (10 marks]
Particulars produce A Product a.
Budgeted Sales (Units) 1,800 2,400
Budgeted Material Consumption per Product 5 3

(Kg.)[Budgeted Material Cost Rs 12 per Kg.I
Standard Hours Allowed per product 5 4
[Budgeted Wage Rate Rs 8 per hour]
Overtime premium is 50% and is payable, if a worker works for more than 40 hours a
week. There are 45 direct workers.
The target productivity ratio (or efficiency ratio) for the productive hours worked by
the direct workers in actually manufacturing the products is 80%; in addition, the non-
productive downtime is budgeted at 20% of the productive hours worked.
There are twelve 5-day weeks in the budget period and it is anticipated that sales and
production will occur evenly throughout the whole period.
it is anticipated that stock at the beginning of the period will be:
Product A 510 units; Product 81,200 units; Raw material 2,.150 Kg.
The target closing stock, expressed in terms of anticipated activity during budget period
are -Product A 15 days' sales; Product a 20 days' sales; Raw material 10 days' consumption.
Required
c!. the material purchases budget, and

a. thewages budgetforthe directworkers, showingthe quantities and values,
for the next period.
3
Q)2) The Standard Cost Sheet per unit for the product produced by X is worked out *
;
on this basis: -
Direct Materials 1.3 Kg @ Rs. 4.00 per Kg
Direct Labour 2.9 hours @ Rs. 2.30 per hour
Factory Overhead 2.9 hours @ Rs. 2.00 per hour
Normal Capacity is 2,00,000 direct labour hours per month.
The Factory Overhead rate is arrived at on the basis of a Fixed Overhead of Rs. 1,00,000
per month and a Variable Overhead of Rs. 1.50 per direct labour hour.
In the month of May, 50,000 units of the product was started and completed. An
investigation of the raw material inventory account reveals that 78,000 Kg of raw
material was used by the factory during May. These goods cost Rs 4.20 per Kg.
1,50,000 hours of Direct Labour were spent during May at a cost of Rs 2.50 per hour.
Factory Overhead for the month amounted to Rs 3,40,000 out of which Rs. 1,02,000
was fixed .
Required: Compute and identify all variances under Material, Labour and overhead
as favorable or adverse. (10 marks}
Q) 3) A company manufactures two products & furnishes the following data for a year.
Annual Total Total Number Total

Products Output Machine of purchase Number
(units) HOurs orders of Set-ups
A 5,000 20,000 160 20
a 60,000 1,20,000 384 44
The annual overheads are as under:
Volume related activity costs 5,50,000
Set-up
cost 8,20,000
qu` ELcofty _ 6,18,ooo
;i `. ri
4Purchase related costs
You are required to calculate to calculate the cost per unit of each product A and a based on:
i) Traditional method on the basis of machine hours
ii) Activity based costing method Ilo marks)
Q) 4) A retail dealer in garments is currently selling 24000 shirts annually. He supplies the
following details for the year ended 31St December, 2007.
Selling price per shirt
Variable cost per shirt
Fixed Costs: -
Staff salaries for the year 1,20,000
General office costs for the year 80,000
Advertising costs for the year 40'000
As a cost accountant of the firm, you are required to answer the following:
(i) Calculate the break-even point and margin of safety in sales revenue and number
of shirts sold.
(ii} Assumethat 20,000 shirtswere sold in a year,find outthe net profit of the firm.
(iii) lfit is decided to introduce sellingcommission of Rs 3 pershirt, how manyshirts
would be required to be sold in a year (in quantity and rupees) to earn a net
income of Rs.15,000.
(iv) Assumingthatforthe year 2008 an additional staffsalaryofRs 33,000 is
anticipated, and price of a shirt is likel`y to be increased by 15%, what should be
the break-even point in number of shirts and sales revenue? (10 marks)
Q)5) A company produces Music CD's. Internal management accounts are drawn up on
a quarterly basis. The company plans to produce and sell 12000 CDs each quarter and
ha.ve a stock of 2000 CDs at the start of quarter 1. The selling Price is RS. 6 and the
variable cost of each CD is Rs 1. Fixed production and nan-production overh.ead are Rs
24000 and Rs 30000 a quarter respectively. The actual results for the year, expressed in
numbers of CDs, are as follows:
Q1 Q2 Q3 Q4 Year
Sales 9,000 16,000 6,000 13,000 44,000
Production 14,000 12,000 11,000 10'000 47'Q00
Calculate the quarterly and annual profits Using
(a) Marginal Costing
(b) Absorption Costing (10 marks)
:i ``' i

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SVKM'S NMIMS

ANIL SURENI)RA MODI SCHOOL OF COMME

Program: B.Com. (Hons.)

Date: 27th November, 2019 Time: |2'^]§b.pma-L` TZ[30 pin (2 hrs)

Marks: 50 No.of pages:Ji

1. All questions are compulsory

Particulars produce A Product a.

Budgeted Sales (Units) 1,800 2,400

Budgeted Material Consumption per Product 5 3

[Budgeted Wage Rate Rs 8 per hour]

week. There are 45 direct workers.

c!. the material purchases budget, and

Direct Materials 1.3 Kg @ Rs. 4.00 per Kg

Direct Labour 2.9 hours @ Rs. 2.30 per hour

Factory Overhead 2.9 hours @ Rs. 2.00 per hour

Normal Capacity is 2,00,000 direct labour hours per month.

as favorable or adverse. (10 marks}

Annual Total Total Number Total

A 5,000 20,000 160 20

a 60,000 1,20,000 384 44

The annual overheads are as under:

Volume related activity costs 5,50,000

qu` ELcofty _ 6,18,ooo

i) Traditional method on the basis of machine hours

ii) Activity based costing method Ilo marks)

Selling price per shirt

Variable cost per shirt

Staff salaries for the year 1,20,000

General office costs for the year 80,000

Advertising costs for the year 40'000

Sales 9,000 16,000 6,000 13,000 44,000

Production 14,000 12,000 11,000 10'000 47'Q00

Calculate the quarterly and annual profits Using

(a) Marginal Costing

(b) Absorption Costing (10 marks)

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