GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER-II - EXAMINATION - SUMMER 2018
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Subject Code: 820001 Date: 29/05/2018
Subject Name: Cost and Management Accounting (CMA)
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
- Attempt all questions.
- Make suitable assumptions wherever necessary.
- Figures to the right indicate full marks.
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Q1 (a) Explain the advantages of and objections against Cost Accounting. 07
(b) Explain in detail the classification of costs according to Variability and Controllability. 07
Q2 (a) Mr. Manish furnishes the following data relating to the manufacture of X-standard products during the month of April: 07
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Raw Materials Consumed Rs. 15,000
Direct Labour Charges Rs. 9,000
Machine Hours Worked 900 hours
Machine Hour Rate Rs. 5
Administrative Overheads 20% on works cost
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Selling Overheads 50 paise per unit
Units Produced 17,100 units
Units Sold 16,000 @ Rs. 4 per unit
You are required to prepare a cost sheet from the above, showing
(1) Cost per unit
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(i1) Profit per unit sold
(b) What do you understand by Job/Order Costing? Under what conditions, it is suitable? 07
OR
(b) What do you mean by Activity Based Costing? Explain different stages involved in ABC system of costing? 07
Q3 (a) Define by products and joint products, what are the distinctions between them? Give examples: 07
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(b) The cost records show the following expenses of manufacturing 200 units of Product X in a process: 07
Material Rs. 4000/-
Labour Rs. 1500/-
Overhead Rs. 500/-
The standard normal wastage in production is 10% and it can be sold in the market at Rs.15 per unit. The actual production is 150 units which is attributable to gross carelessness of the workers. Prepare Process A/c and Abnormal Wastage A/c.
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OR
(a) What do you mean by Operating Costing? Explain characteristics, features and types of cost units used in operating costing. 07
Q4 (a) A, B and C are production departments and D is service department. The actual costs for October, 2009 are as follows: 07
Rent Rs. 1000
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Repairs to plants Rs. 600
Depreciation of plant Rs. 450
Light Rs. 100
Supervision Rs. 1500
Fire insurance stock Rs. 500
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Power Rs. 900
Employees state insurance contribution Rs. 150
The following information is available in respect of four departments.
| Departments | A | B | C | D |
|---|---|---|---|---|
| Area sq ft. | 1500 | 1100 | 900 | 500 |
| No. of employees | 20 | 15 | 10 | 5 |
| Total wages Rs. | 6000 | 4000 | 3000 | 2000 |
| Value of Plant Rs. | 24000 | 18000 | 12000 | 6000 |
| Value of stock Rs. | 15000 | 9000 | 6000 | - |
Apportion the cost to the various departments by preparing overhead distribution chart.
(b) Define decision-making. Explain the various steps involved in the decision-making process. 07
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OR
(a) Shah Industries manufactures small capacity motors. The cost break-up of a motor is as under: 07
Material Rs. 50
Labour Rs. 80
Variable Overheads 75% of labour cost
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Fixed overheads of the company amount to Rs. 2,40,000 p.a. The sales price of the motor is Rs. 230 each.
(1) Determine the number of motors that have to be manufactured and sold in a year in order to break ‘even.
(i1) How many motors to be made and sold to make a profit of Rs. 1,00,000.
(iit) If the sale price is reduced by Rs. 15 each, how many motors have to be sold to break even.
(b) Explain the concept of transfer price. Elaborate in detail the different techniques available to work out the transfer price. 07
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Q5 (a) From the following details, which product would be recommended if time is the limiting factor? 07
| Particulars | Product A | Product B |
|---|---|---|
| Direct Material Per Unit Rs. | 24 | 14 |
| Direct Labour @ Rs. 2 per hour Rs. | 20 | 30 |
| Variable Overheads (% of labour cost) | 200% | 300% |
| Selling Price Per Unit Rs. | 150 | 200 |
(b) Define Budget. Elaborate in detail the necessary features of budgets. 07
OR
(a) Calculate Labour rate variance and Labour efficiency variance using the following data: 07
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Standard: 48 hours @ Rs. 3 per hour
Actual: 50 hours @ Rs. 3.50 per hour
(b) Explain in detail the advantages of standard costing system. 07
A department attains a sale of Rs. 6,00,000 at 80% of its normal capacity and its expenses are given below: 07
| Administrative Expenses | Rs. | Selling Costs | Rs. |
|---|---|---|---|
| Office Salaries | 90,000 | Salaries | 8% of sales |
| General Expenses | 2% of sales | Travelling Expenses | 2% of sales |
| Depreciation | 7,500 | Sales Office Expenses | 1% of sales |
| Rates & Taxes | 8,750 | General Expenses | 1% of sales |
The distribution costs are: Wages — Rs. 15,000, Rent — 1% of sales, and other expenses — 4% of sales.
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Draw up a flexible administration overhead, selling and distribution overhead costs budget, operating at 80%, 90%, 100% and 110% normal capacity.
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