Seat No.: Enrolment No.
GUJARAT TECHNOLOGICAL UNIVERSITY
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MBA - SEMESTER 2 - EXAMINATION - WINTER 2018
Subject Code: 3529202 Date: 24/12/2018
Subject Name: Cost & Management Accounting (CMA)
Time: 02:30PM TO 05:30PM Total Marks: 70
Instructions:
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- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
Q.1 Explain the following terms in brief: 14
(a) Abnormal loss & abnormal gain
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(b) Profit centre
(c) Cost Ascertainment
(d) Kaizen costing
(e) Break even point
(f) Incremental cost
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(g) Period cost
Q.2 (a) Explain the points of distinction between cost accounting and management 07 accounting.
(b) It is said, “Cost accounting is a system of foresight and not postmortem 07 examination; it turns losses in to profits, speeds up activities and eliminates wastes.” Discuss this statement in detail.
OR
(b) Electrical Ltd is manufacturing coolers: and the following details are furnished 07 for the year ended 31 December 2017:
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Work-in-process 1 January 2017:
At prime cost 51,000
Manufacturing expenses 25,000
Work-in-process 31 December 2017:
At prime cost 45,000
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Manufacturing expenses 20,000
Stock of raw materials, 1 January 2017 2,05,000
Purchases of raw materials 4,97,000
Direct labour 1,71,000
Manufacturing expenses 84,000
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Stock of raw materials on 31 December 2017 2,04,000
On the basis of the above data, prepare a statement showing the cost of production.
Q.3 (a) What is Activity-based costing? Distinguish between ABC and traditional 07 costing system?
(b) A product is obtained after passing it through three processes. The following 07 information is collected for January 2016.
Particulars Processes
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I II III
Direct wages(Rs.) 4,000 6,000 8,000
Output in the month (units) 950 840 750
Normal loss 5% 10% 15%
Value of scrap per unit 4 8 10
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(Rs.)
Additional information:
1,000 units, at Rs. 6 each, were introduced in Process I. There was no stock of materials of work-in-progress at the beginning or at the end of the month.
Production overhead was Rs. 18,000 for the month. Prepare process accounts indicating normal loss, abnormal loss and abnormal gain.
OR
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“Price setting generally requires a balance between market forces and cost 07 considerations.” Explain?
Q.4 (a) The sales and profit for two years are as below: 07
Year Sales(Rs.) Profit(Rs.)
2016 1,50,000 20,000
2017 1,70,000 25,000
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Calculate:
(a) P/V ratio; (b) BEP; (c) Sales required to earn a profit of Rs. 40,000;
(d) Margin of safety at a profit of Rs. 1,25,000; (e) Profit made when sales are Rs. 1,00,000; (f) Variable costs of two years.
(b) Describe the steps in the decision-making process. In which steps does the 07 management accountant play major roles?
OR
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(a) A factory is currently running at 50% capacity-and produces 5,000 units at a cost of 07 Rs. 90 per unit as per details below:
Materials Rs. 50
Labour Rs. 15
Factory overheads Rs. 15(Rs. 6 fixed)
Administrative overheads Rs. 10 (Rs. 5 fixed)
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The current selling price-is Rs. 100/- per unit.
At 60% working, material cost per unit increased by 2% and selling price per unit falls by 2%. Whereas at 80% working, material cost per unit increased by 5% and selling price per unit falls by 5%.
Estimate profits-of the factory at 60% and 80% working and give your comments.
(b) Define Strategic Management Accounting? Explain the techniques of Strategic 07 Management Accounting in brief?
Q.5 (a) Following are the particulars in respect of a product where two types of 07 materials A and B are used:
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Material Standard Actual
input Tonnes Rate Tonnes Rate
A 120 10.00 140 09.50
B 80 07.50 60 09.00
200 200
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Less: Loss 20 18
Net production 180 182
You are required to calculate:
(a) Material Price Variance
(b) Material Mix Variance
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(c) Material Yield Variance
(d) Material Usage Variance
(b) CASE STUDY 07
TabComp Inc. is a retail distributor for MZB-33 computer hardware and related software and support services. TabComp prepares annual sales forecasts of which the first six months for 2016 are presented below.
Cash sales account for 25% of TabComp’s total sales, 30% of the total sales are paid by bank credit card, and the remaining 45% are on open account (TabComp’s own charge accounts). The cash and bank credit card sales are received in the month of the sale. Bank credit card sales are subject to a four- percent discount deducted at the time of the daily deposit, The cash receipts for sales on open account are 70% in the month following the sale, 28% in the second month following the sale and the remaining are estimated to be uncollectible.
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TabComp Inc. Sales Forecast for Six Months - 2016
Hardware Sales Software sales Total Sales
& Support
Months Units Rs. Rs. Rs.
January 130 390000 160000 550000
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February 120 360000 140000 500000
March 110 330000 150000 480000
April 90 270000 130000 400000
May 100 300000 125000 425000
June 125 375000 225000 600000
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Total 675 2025000 930000 2955000
TabComp’s month-end inventory requirements for computer hardware units are 30% of the next month’s sales. A one-month lead time is required for delivery from the manufacturer; thus‘orders for computer hardware units are placed on the 25™ of each month to_assure that they will be in the store by the first day of the month needed. The computer hardware units are purchased under terms of N/45 measured from the time the units are delivered to TabComp. TabComp’s purchase price for'the computer units is 60% of the selling price.
Calculate the cash that TabComp can expect to collect during April 2016. Be sure to show all of your calculations.
OR
(a) As part of the annual budget process, TabComp prepares a cash budget by 07 month for the entire year. Explain why a company such as TabComp prepares a cash budget by month for the entire year.
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(b) TabComp is determining the MZB-33 computer hardware units that will be 07 ordered on January 25, 2016. Determine the projected number of computer hardware units that will be ordered.
Calculate the value of the order that TabComp will place for these computer hardware units. Also highlight in which month will TabComp pay for these computer hardware units.
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