Download GTU MBA 2018 Summer 2nd Sem 2820001 Cost And Management Accounting Question Paper

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GUJARAT TECHNOLOGICAL UNIVERSITY

MBA - SEMESTER 02- EXAMINATION — MAY 2014

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Subject Code: 2820001

Date:29/05/2018

Subject Name: Cost and Management Accounting

Time:10:30 AM To 01:30 PM

Total Marks: 70

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Instructions:

1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks

Q-1 a. Answer the following MCQs 06

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1. Describe the method of costing to be applied in case of Nursing Home:
   A. Operating Costing B. Process Costing
   C. Unit costing D. Job Costing
2. Cost of abnormal wastage is:
   A. Charged to the product cost B. Charged to the profit & loss account
   

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   C. Charged partly to the product D. Not charged at all.
   and partly profit & loss
   account
3. Blanket overhead rate is:
   A. One single overhead B. Rate which is blank or nil rate
   

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   absorption rate for the whole
   factory
   C. rate in which multiple D. Always a machine hour rate
   overhead rates are calculated
   for each production
   

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   department, service
   department etc.
4. Statutory cost audit are applicable only to:
   A. Firm B. Company
   C. Individual D. All mentioned

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5. Currently, a company has fixed costs of Rs.32,500, a contribution ratio of
   65%, and is selling its product for Rs. 12 per unit. If the sales price per unit
   is increased by 24, how much less will the break-even point in sales be
   when compared to the current condition?
   A. T 14411 B. 13414
   

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   C. 17500 D. 35932
6. The standard unit (SQ) were 5200, the standard price (SP) was 3.25, and
   the material quantity variance (AV) was I 325 favorable. The actual unit
   will be .......
   A. 5300 B. 5000
   

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   C. 5100 D. 5200

Q-1 b. Explain the following terms 04

1. Period Cost
2. Cost object
3. Discretionary cost

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4. Abnormal Gain

Q-1 c. Actual output 400 units 04

Standard price T2 per kg

Actual quantity 2000 kg

Standard quantity 4 kg per unit

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Calculate Material cost variance, material price variance and material-usage variance

Q-2 Write a short note on Cost Accounting Standards (CAS). 07

A company has five department. P, N, R, S are production department and T is a service department. The actual costs for a period are as follows:

The following data are available in respect of the five departments:

Apportion the cost to various departments on equitable bases

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OR

A factory uses a job costing system. The following data are available from the books at the year ending on 31st March 2013.

Required:

A. Prepare a job cost sheet showing the prime cost, works cost, production cost, cost of sales and sales value.

B. In the year-2013-14 the factory has received an order for a number of jobs. It is estimated that the direct material would be 2400000 and direct labor would cost Rs.1500000. What would be the price for these jobs if the factory intends to earn the same rate of profit on sales, assuming that the selling and distribution overheads have gone up by 15%. The factory recovers factory overhead as a percentage of direct wages and administrative and selling and distribution overhead as a percentage of works cost respectively, based on the cost rates prevalent in the previous year.

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Q-3 Write a short note on characteristics and features of operating costing. 07

A food- processing company produces four product from a single raw material. The four products are obtained simultaneously at the point of separation. The product R does not require further processing before being taken to the market. The other three products P, Q and S require further processing before being sold. The company follows the net market value

OR

the last year were as follows:

You are required to.

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a. Prepare a comparative profit and loss statement showing the profit/loss made on each of for products:

b. Assess the change in the profit/loss (given in answer to (a) above], if a proposal (stated below) made by the top management is accepted.

Proposal: To sell all the products directly to other processor just after separation without any further processing. The expected price per unit for the products are P-37,Q-33.5,R-38 and S-39

Q-4 a. Explain the assumptions of CVP analysis in detail. 07

Following information is available regarding process A for the month of February, 2012 :

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Production Record

Cost Records

Presuming that average method of inventory is used, prepare:

1. Statement of equivalent production.
2. Statement showing cost for each element.

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3. Statement of apportionment of cost.

b. What is cost plus pricing? Which are the most common methods of cost plus pricing? 07

OR

Auto link Ltd has an annual production of 90000 units for a motor component. The component’s cost structure is as follows

a. The purchase manager has an offer from a supplier who is willing to supply the component at T 540. Should the component be purchased and production stopped?

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b. Assume the resources now used for this component’s manufacture are to be used to produce another new product for which the selling price is Rs. 485 In the latter case, the material price will be X 200 per unit. 90000 units of this product can be produced on the same cost basis as above for labour and expenses. Discuss whether it would be advisable to divert the resources to manufacture the new product, on the footing that the component presently being produced would, instead of being produced, be purchased from the market.

Q-5 What do you mean by budgetary control? Mention the necessary features of Budget? 07

XYZ corporation produces three product A, B and C. The master budget called for the sale of 10000 units of A at 12, 6000 units of B at X 15 and 8000 units of C at X 9.The firm actually sold 11000 units of A at 11.50, 5000 units of B at 15.10 and 9000 units at X 8.55

Calculate all sales variance based on Turnover.

OR

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Data 1-2-3 is a top-selling electronic spreadsheet product. Data is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Data 1-2-3, 4.0 or carlier versions). Although the same physical product is provided to each customer group, sizable differences exist' in selling prices and variable marketing costs:

The fixed costs of Data 1-2-3, 5.0 are T 14,000,000. The planned sales mix in units is 60% new customers and 40% upgrade customers.

1. What'is the Data 1-2-3, 5.0 breakeven point in units, assuming that the planned 60%:40% sales mix required is attained?
2. If the sales mix is attained, what is the operating income when 200,000 total units are sold?
3. Show how the breakeven point in units changes with the following customer mixes:
   1. New 50% and Upgrade 50%

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4. What should be the sales to attain the targeted income of X 2000000, assuming the ratio of sales to be 60% for new customer and 40% of upgraded customer and income tax rate of 30%?

Q-5 Wigan Associates is a recently formed law partnership. Ellery Hanley, the managing partner of Wigan Associates, has just finished a tense phone call with Martin Offiah, president of Widnes Coal. Offiah strongly complained about the price Wigan charged for some legal work done for Widnes Coal.

Hanley had just come from a meeting with St. Helen’s Glass (Glass), which was very pleased with both the quality of the work and the price charged on its most recent job.

Wigan Associates operates at capacity and uses a cost-based approach to pricing (billing) each job. Currently it uses a simple costing system with a single direct-cost category (professional labor-hours) and a single indirect-cost pool (general support). Indirect costs are allocated to cases on the basis of professional labor-hours per case. The job files show the following:

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Professional labor costs at Wigan Associates are 370 an hour. Indirect costs are allocated to cases at T105 an hour. Total indirect costs in the most recent period were 321,000.

Hanley asks his assistant to collect details on those costs included in the 321,000 indirect-cost pool that can be traced to each individual job. After analysis, Wigan is able to reclassify 14,000 of the 321,000 as direct costs:

Hanley decides to calculate the costs of each job as if Wigan had used six direct cost-pools and a single indirect-cost pool. The single indirect-cost pool would have X7,000 of costs and would be allocated to each case using the professional labor-hours base.

Required

1. Compute the costs of the Widnes Coal and St. Helen’s Glass jobs using Wigan’s simple costing system.

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2. What is the revised indirect-cost allocation rate per professional labor-hour for Wigan (Associates Required when total indirect costs are 37,000?
3. Compute the costs of the Widnes and St. Helen’s jobs if Wigan Associates had used its refined costing system with multiple direct-cost categories and one indirect-cost pool.
4. Compare the costs of Widnes and St. Helen’s jobs in requirement 1 with those in requirement 3 of Problem. Comment on the results.

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