R5

Code No: R5-302/MBA

M.B.A. III-Semester Examinations, December-2007.

COST AND MANAGEMENT ACCOUNTING

Time: 3 hours Max. Marks: 60

Answer any FIVE questions

All questions carry equal marks
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1. What are the general principles which you as a cost controller

should keep in mind while you set costing system?

2. Explain the following:

a) Cost of tools
b) Cost of receiving and handling material
c) Blanket rate
d) Comprehensive machine hour rate.

3. A work order passes through two distinct processes. The product

of the first process less wastage and by-product, becomes the raw
materials for the second process. All by-products are sold off direct
from factory. The following information is obtained from the factory
records :

Details First Process Second Process

Raw Materials 1,00 tonnes at Rs. 30 a tonne __

Wages Rs. 25,00 Rs. 20,000

Factory overhead 80% of wages 75% of wages
Wastages 10 tonnes 15 tonnes
Sales of by-products 190 tonnes at cost plus 20% 85 tonnes at cost plus
25%

Give the Ledger accounts for the first and second processes,
showing at each stage the cost of the product and the profit on the
sale of the by-products.

Contd….2
Code No: R5-302/MBA -2-

4. A factory engaged in manufacturing plastic buckets is working at

40% capacity and produces 10,000 buckets per annum.
The present cost break-up for one bucket is as under:
Material Rs.10
Labour cost Rs.3
Overhead Rs.5 (60% fixed)
The Selling Price is Rs.20 per bucket.
If it is decided to work the factory at 50% capacity, the selling price
falls by 3%. At 90% capacity, the selling price falls by 5%
accompanied by a similar fall in the prices of material.
You are required to calculated the profit at 50% and 90%
capacities.

5. What is contribution analysis ? Explain its significance in cost volume profit

analysis.

6. What is Zero Based Budgeting ? State the requirements for application of

Zero Based Budgeting.

7. In a manufacturing concern, the standard time fixed for a month is 8,000

hours. A standard wage rate of Rs.2.25 paise per hour has been fixed.
During one month, 50 workers were employed and average working days
in a month are 25. A worker works for 7 hours in a day. Total wage bill
of the factory for the month amounts to Rs.21,875. There was a
stoppage of work due to power failure (idle time) for 100 hours. Calculate
various labour variances.

8. Discuss the need and objectives of inter firm comparison.

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