G 5238-B (Pages : 3) Reg.No….............

Name……………
M.B.A. DEGREE EXAMINATION, JUNE 2002
First Semester
Faculty of Management
ACCOUNTING FOR MANAGEMENT
(Old Scheme)
Time : Three Hours Maximum:60
Marks
Section A
Answer any five questions
Each question carries 3 marks.
1. What is realization concept in accounting ?
2. Differentiate between Adjusting entry and Closing entry.
3. What are compensating errors ?
4. Distinguish between Cash discount and Trade discount.
5. What is a master budget ?
6. What is meant by “angle of incidence” ?
7. Distinguish between Labour rate variance and Labour efficiency variance.
8. What is meant by EPS ?
(5 x 3 = 15 marks)
Section B
Answer any five questions
Each question carries 5 marks.
9. Explain the errors which are not disclosed by the trial balance.
Or
Explain the options exercisable by the holder of an accepted bill.
10. Explain the accounting treatment of the following: -
(a) Outstanding expense.
(b) Income received in advance.
(c) Interest on drawings.
(d) Provision for bad debts.
Or
What are financial statements ? Mention the objectives of preparing the statements.
11. What are the important uses of marginal costing ?
Or
 Sales of product amounts 200 units per month at Rs.10 per unit. Fixed overhead is Rs.400 per month
and variable cost is Rs.6 per unit. There is a proposal to reduce price by 10 per cent. Calculate
present and future P/V ratio and how many units must be sold to maintain the present profit.

Turn over
2 G 5238-B

12. What is meant by standard cost; in what circumstances may they be safely employed; what
advantages do they offer ?
Or
From the following information, compute (a) price variance; (b) usage variance; and (c) material mix
variance.
Standard Actual

Material Quantity (kg.) Price (Rs.) Quantity (kg.) Price (Rs.)

A … 10 3 15 4
B … 15 4 25 3
C … 25 2 35 2
13. Distinguish between Zero-based budgeting and Performance budgeting.
Or
Explain briefly the main objectives of Budgetary control.
(5 x 5 = 25 marks)
Section C (Compulsory)
Each question carries 10 marks.
14. Mr. Himansu carries on the business as a retailer. He extracted the following balances from his
books of account as on 31st December 2000: -

Debit Credit
Rs. Rs.
Capital Account : 7,50,000
Drawings : 18,000
Buildings : 5,00,000
Furniture and Fixtures : 20,000
Opening stock : 25,00,000
Sales : 18,00,000
Purchases : 13,37,000
Sundry Creditors : 2,00,000
Sundry Debtors : 5,00,000
Office expenses : 24,000
Salaries : 18,000
Rent : 6,000
Travelling conveyance : 4,000
Insurance : 1,000
Motor car expenses : 15,000
Postage and Telephones : 3,600
 Electricity charges : 2,400
Fixed deposit with banks at
10% interest : 50,000
Cash in hand : 1,000
Cash at bank : 10,000
Loan from HC at 12 interest : 25,000
Motor car : 40,000
Printing and Stationery : 5,000
Provision for Bad and doubtful debts : 5,000

27,80,000 27,80,000

3 G 5235-B

You are required to prepare a Profit and Loss Account for the year ended 31st December,2000 and a
Balance Sheet as on that date taking into consideration the following adjustments: -
(a) Closing stock Rs.64,800.
(b) Annual insurance premium of Rs.1,000 is valid upto 31st March,2001.
(c) Provision for Bad and Doubtful debts is to be kept at 1 ½ % on Sundry debtors.
(d) Interest on F.D. with Banks and payable on loan from HC is to be provided.
(e) Provide depreciation on buildings at 2 ½ per cent furniture and fixtures at 10%, and motor
car at 20%.
(f) Mr. Himansu has used goods for personal use costing Rs.2,000 for which adjustment is
necessary.
(10 marks)
15. There are two factories under the same management. The management desires to merge these two
plants. The following particulars are available: -
Factory I Factory II
Capacity operation … 100 per cent 60 per cent
Sales … Rs.300 lakhs Rs.120 lakhs
Variable costs … Rs.220 lakhs Rs.90 lakhs
Fixed costs … Rs.40 lakhs Rs.20 lakhs
You are required to calculate (a) what would be the capacity of the Merged Plant to be operated for
the purpose break-even and (b) what would be the profitability on working at 75 per cent of the
merged capacity.
(10 marks)