Name : ……………………………………………………………

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Roll No. : ……………………………………………..…………..
Invigilator’s Signature : ………………………………………..
CS/MBA (NEW)/SEM-3(FT)/MB-301/2010-11
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2010-11
MANAGEMENT ACCOUNTING
Time Allotted : 3 Hours Full Marks : 70
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The figures in the margin indicate full marks.
Candidates are required to give their answers in their own words
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as far as practicable.

GROUP – A
( Multiple Choice Type Questions )
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1. Choose the correct alternatives for any ten of the

following : 10 × 1 = 10

i) Whenever there is an abnormal loss in a process driven

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manufacturing firm

a) scrap value, if any, should be credited to process

account
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b) scrap value, if any, should be credited to abnormal

loss account

c) scrap value, if any, should be credited to costing

a c.

profit and loss account

d) scrap value, if any, should be credited to profit and

loss account.
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ii) Margin of safety can be improved by

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a) decrease of sale price per unit

b) increase of fixed cost

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c) decrease of sales volume

d) decrease of variable cost per unit.

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iii) Which of the following is not an assumption in break-

even analysis ?
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a) Production and sales are equal

b) Fixed costs remain constant at various levels of

activity
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c) Variable costs are not strictly variable with volume

of output
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d) Sales mix remains constant.

iv) Which of the following categories of costs is not

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considered as a component of fixed factory overhead ?

a) Rent
a c.

b) Property taxes

c) Power

d) Depreciation.
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v) Which of the following costs is a semi-variable cost ?

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a) Telephone expenses

b) Rent of stores department

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c) Insurance premium

d) Direct labour costs.

vi) A job order cost accumulation system is most suitable

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where

a) mass production techniques are used

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b) continuous processing is performed

c) homogeneous products are produced

d) customized products are produced.

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vii) Angle of incidence is the angle between

a) total cost line and total revenue line

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b) variable cost line and total revenue line

c) fixed cost line and total cost line

d) fixed cost line and variable cost line.

ut .

viii) Capital budgeting is a technique of

a) short term budgeting

a c.

b) both short-term and long-term budgetings

c) long term budgeting

d) none of these.
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ix) Cost drivers are

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a) accounting techniques used to control costs

b) activities that cause costs to increase as the

activity increases
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c) accounting measurements used to evaluate
whether or not performance is proceeding
according to plan
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d) mechanical basis, such as machine hours,
computer time, size of equipment, etc., used to
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assign costs to activities.

x) Sales volume variance is the difference between

a) actual quantity sold at actual price and standard

quantity at actual price
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b) actual quantity sold at actual price and standard

quantity at standard price
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c) actual quantity sold at standard price and

standard quantity at standard price

d) actual quantity sold at standard price and

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standard quantity at actual price.

xi) While computing variances from standard costs, the

difference between the actual and the standard prices
a c.

multiplied by the actual quantity yields a

a) yield variance b) volume variance

c) mix variance d) price variance.

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GROUP – B
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( Short Answer Type Questions )
Answer any three of the following. 3 × 5 = 15

2. What are the characteristics of process costing ?

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3. Describe the accounting treatment of normal loss, abnormal

loss and abnormal gains in process costing.

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4. A company incurs the following expenses to produce 1,000
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units of article :

Rs.

Direct materials 30,000

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Direct labour 15,000

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Power ( 20% fixed ) 10,000

Repairs and maintenance ( 15% fixed ) 8,000

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Depreciation ( 40% variable ) 6,000

Administrative expenses ( 100% fixed ) 12,000

a c.

Prepare a flexible budget showing individual expenses of

production level at 1,500 units.

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5. A company produces a standard product. The selling price is

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Rs. 10 per unit. Fixed costs are Rs. 24,000 per annum and

variable costs are expected to attain be Rs. 6 per unit.

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a) How many units the company must make and sell

before earning a profit ?

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b) How many units the company must make and sell to

register a profit of Rs. 10,000 ?

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The company has fixed costs of Rs. 70,000 and wishes to

earn a profit of Rs. 50,000. How many units must it sell in

order to attain this if selling price is Rs. 12 per unit and unit
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variable costs are Rs. 4 ?

6. From the information given below, calculate the labour cost

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variance for the two departments :

Dept. A Dept. B
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Actual gross wages Rs. 2,000 Rs. 1,800

Standard hours produced 10,000 8,000

a c.

Standard rate per hour 30 paise 25 paise

Actual hours worked 8,000 6,000

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GROUP – C
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( Long Answer Type Questions )
Answer any three of the following. 3 × 15 = 45

7. From the following information prepare a cash flow

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statement ( As per AS-3 ) for the year ended 31st March,

2010 :
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Balance Sheet of ABC Ltd.
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31.3.2009 31.3.2010 31.3.2009 31.3.2010
Liabilities Assets
( Rs. in lakh ) ( Rs. in lakh ) ( Rs. in lakh ) ( Rs. in lakh )

Equity share of Rs.

100 each 80 100 Patents plant 20 28

er.

Redeemable Pref.

share of Rs. 100

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each Rs. 50 paid 20 Nil (w.d.v) 60 72

Share premium 01 Nil Investment 40 32

General reserve 40 28 Stock 24 12

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Capital Redemption

reserve Nil 20 Debtors 60 40

a c.

Profit & Loss A/c. 31 40 Cash 08 20

Current Liabilities 40 16

Total 212 204 Total 212 204

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Additional Information :
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i) During the year, the company paid Rs. 8,00,000 as
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equity dividend and Rs. 2,25,000 as preference

dividend.
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ii) The company redeemed the preference share at a

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premium of 5% after making a call of Rs. 50 per share

to make the share fully paid up.

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iii) During the year, one plant, whose book value was
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Rs. 4,00,000 was sold at a loss of Rs. 1,00,000 and the

company purchased another plant for Rs. 24,00,000

ut .

iv) During the year, the company sold some of its

a c.

investments for Rs. 16,00,000 at a profit of

Rs. 4,00,000.
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 CS/MBA (NEW)/SEM-3(FT)/MB-301/2010-11

8. A product passes through three processes — A, B and C. The

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details of expenses incurred on the three processes during
the year 2009 were as under :

Process A Process B Process C

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Rs. Rs. Rs.

Units introduced ( cost per unit ) 10,000

Sundry materials 10,000 15,000 5,000

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Labour 30,000 80,000 65,000
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Direct expenses 6,000 18,150 27,200

Selling price per unit of output 120 165 250

Management expenses during the year were Rs. 80,000 and

selling expenses were Rs. 50,000. These are not allocable to
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processes.

Actual outputs of the three processes were : A 9300 units,

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B 5400 units and C 2100 units. Two thirds of the output of

process A and half of the output of process B was passed on
to the next process and the balance was sold.

The normal loss of the three processes, calculated on the

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input of every process was :

A 5%, B 15% and C 20%. The loss of process A was sold at

Rs. 2 per unit, that of B at Rs. 5 per unit and of process C at
a c.

Rs. 10 per unit.

Prepare three processes accounts and the profit and loss

accounts.
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9. a) What is meant by decision package analysis while

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applying zero based budgeting ?

b) Elaborate the difference between joint products and by-

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products.

c) What is meant by full-cost pricing ? State the

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limitations of full-cost-pricing techniques.

10. S & P Manufacturing Co. manufactures and sells a product

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with a normal capacity of 60000 direct labour hours. The

unit cost of the product for the year 2009-2010 is as follows :

Manufacturing costs per unit :

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Particulars Rs.

Direct materials ( 2 kgs at the rate of Rs. 10 per kg ) 20

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Direct labour ( 3 hours at the rate of Rs. 20 per hour ) 60

Variable overhead ( 3 hours at the rate of Rs. 4 per hour ) 12

Fixed overhead ( 3 hours at the rate of Rs. 6 per hour ) 18

ut .

Total 110

Selling and administrative costs :

a c.

Variable — Rs. 5 per unit

Fixed — Rs. 2,10,000

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During the year, the company had the following activities :

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Units produced — 20,000 units

Units sold — 19,000 units

Direct labour hours worked — 60,000 hours

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Unit selling price — Rs. 150

Actual fixed manufacturing overhead was Rs. 10,000 less

than budgeted fixed manufacturing overhead.
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Budgeted variable manufacturing overhead was Rs. 6,000
less than actual variable manufacturing overhead.
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The overhead variances, if any, are adjusted to cost of goods
sold.

You are required to prepare income statement for 2009-2010

under
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a) absorption costing method

b) marginal costing method. 8+7

11. Write short notes on any three of the following : 3×5

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a) Batch costing

b) Differential pricing
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c) Relevant costs

d) Planning and performance budgeting

e) Contribution analysis.
a c.
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