You are on page 1of 3

OR

Code No: OR-302/MBA


M.B.A. III-Semester Examinations, December-2006.
COST AND MANAGEMENT ACCOUNTING
Time: 3 hours Max. Marks: 60
Answer any FIVE questions
All questions carry equal marks
---
1. Explain in detail the concept of Cost Volume profit relationship.

2. Distinguish between standard costing and Budgetary control.

3. Write short notes on the following:


(a) Equivalent production
(b) KEY FACTOR
(c) Inter firm comparison

4. The Lucky Pen Manufacturing Company is producing two types of


pens ‘Deluxe’ and ‘Popular’. The manufacturing cost for the year-
ended 31st March 1986 were:
Direct material Rs. 2,00,000
Direct wages Rs. 1,12,000
Production overheads Rs. 48,000
Rs. 3,60,000
It is ascertained that:
(a) Direct material in each ‘Deluxe’ type cost twice as much that
of each ‘popular’ Type.
(b) Direct wages for ‘popular’ type were 60 percent of those for
‘Deluxe’ type for each pen.
(c) Production overhead was 30 paise per pen for both the types.
(d) Administrative overheads for each type was 200 percent of
direct labour.
(e) Selling cost was 30 paise per pen for both the types.
(f) Production during the year was ‘Deluxe’ type 40,000 pens of
which 36,000 were sold and ‘Popular’ type 1,20,000 pens of
which 1,00,000 were sold.
(g) Selling price was Rs.7 per pen of ‘Deluxe’ type; and Rs.5 for
pen of ‘Popular’ type.
Prepare a statement showing the total cost per pen of each
type and the profit made on each type of pen and total profit
of the company.

Contd….2
Code No: OR-302/MBA -2-
5. JV Enterprise is currently working at 50% capacity and produces
10,000 units.
At 60% working, raw-material cost increase by 2% and selling price
falls by 2%. At 80% working raw material cost increase by 5% and
selling price falls by 5%.
At 50% capacity working, the product costs Rs.180 per unit and is
sold at Rs. 200 per unit
The unit cost of Rs.180 is made up as follows:
Material Rs.100
Wages Rs.30
Factory overhead Rs.30 (40% fixed)
Administrative overhead Rs.20 (50% fixed)
Prepare a marginal cost statement showing the estimated
profit of the business when it is operated at 60% and 80%
capacity. At what level of capacity, the firm should operate? Why?
Give justification.

6. AB Ltd has established the following standard mix for producing 9


gallons of product A:
5 gallons of material X at Rs. 7 per gallon Rs. 35
3 gallons of material Y at Rs.5 per gallon Rs. 15
2 gallons of material Z at Rs. 2 per gallon Rs. 4
Rs. 54
A standard loss of 10% of input is expected to occur.
Actual input was as under:
53,000 gallons of material X at Rs. 7 per gallon.
28,000 gallons of material Y at Rs. 5.30 per gallon
19,000 gallons of material Z at 2.20 per gallon.
Actual output for a period was 92,700 gallons of product A.
Calculate all Material Variances.

7. Following particulars relate to a manufacturing factory for the


month of March 1983:
Variable cost per unit Rs.14
Fixed factory overhead Rs.5,40,000
Fixed selling overhead Rs.2,52,000
Sales price per unit Rs.20
(a) What is the break-even point expressed in rupee sale?
(b) How many units must be sold to earn a target net income of
Rs.60,000 per month.
(c) How many units must be sold to earn a net income of 25% of
cost?
(d) What should be the selling price per unit if the break-even
point is to be brought down to Rs.1,20,000 units?
Contd….3
Code No: OR-302/MBA -3-

8. Edible Oils Limited is a manufacturing concern. Their product


passes through three processes viz., Crushing, Refining and
Finishing. Following figures were taken from their books for the
month of March, 1985.
Crushing Refining Finishing
Rs. Rs.
Wages 10,000 4,000 6,000
Power 2,400 1,440 970
Steam 2,400 1,800 1,800
Other material 400 8,000 --
Plant repairs 1,120 1,320 550
Sundry expenses 5,800 2,640 900
2,000 tonnes of Copra were consumed and the purchase
price was Rs.400 per tonne. Output was 1,200 tonnes of Crude
Oil, 850 tonnes of Refined Oil and 840 tonnes of finished product
(in casks) ready for delivery.
The difference in tonnage in respect of refined Crude Oil is
not all loss, 240 tonnes of Crude Oil being sold at cost plus 20%.
Copra was brought to the factory in heavy sacks and these were
sold for Rs.1,500.
600 tonnes of Copra residue were sold for Rs.35,000 and 80
tonnes of waste from refining process were sold for Rs.9,500. The
cost of casks used in finishing process was Rs.24,000. The casked
oil was sold for Rs.1,000 per tonne.
You are required to prepare Process Account, showing the
cost per tonne of output at each stage of manufacture. Also
calculate the total profit for the period.

---

You might also like