GUJARAT TECHNOLOGICAL UNIVERSITY
MBA - SEMESTER- II + EXAMINATION - SUMMER 2016
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Subject Code: 820001 Date: 25/05/2016
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) Define the terms: Cost Accounting and Management Accounting. “Management 07 Accounting is an extension of managerial aspects of Cost Accounting”. Discuss.
(b) Baldha Ltd. Produces a Chemical A of which standard material cost is: 07
40% of Material P at Rs. 4000 Per Metric Tonne
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60% of Material Q at Rs. 6000 Per Metric Tonne
Standard Loss of 10% is expected in production. During January 2008, 171 metric tonnes of A were produced from the use of 90 metric tonnes of material P at Rs. 3,600 per metric tonne and 110 metric tonnes of material Q at Rs. 6,800 per metric tonne. Calculate the following material Variances for the month of January 2008 indicating their nature, i.e. favorable or adverse.
- Material Price Variance
- Material Mixture Variance
- Material Yield Variance
- Material total Cost Variance
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Q2 (a) Following details are available: 07
| Sales | Total Cost | |
|---|---|---|
| PERIOD 1 | Rs 39,000 | Rs 34,800 |
| PERIOD 2 | Rs 43,000 | Rs 37,600 |
You are required to determine:
- Contribution of the firm
- Annual Variable and Fixed Costs
- Margin of Safety as Percentage of Sales
- Break-Even Sales
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(b) Write Short notes on: 07
- Production order
- Job Costing
- Economic Batch Quantity
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OR
(b) Site three Examples where direct expense is not included in the cost of production. 07 Justify why these expenses are not regarded as direct expenses.
Q3 (a) The Costs records show the following expenses of manufacturing units of Product 07 X in a process:
Material Rs 4000
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Labour 1500
Overheads 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 in gross carelessness of the workers.
Show the treatment of wastage in the process A/c and prepare the abnormal wastage A/c.
(b) Enumerate the importance provisions of cost audit (report) rules and describe in what way 07 they are different from financial auditor’s report
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Q.3 (a) A factory uses job costing. The following cost data is obtained from its books for the year 07 ending 31 December 2012.
Direct Material Rs 90,000
Direct Wages 75,000
Profit 60,900
Selling and distribution Overheads 52,500
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Administration Overheads 42,000
Factory Overheads 45,000
- Prepare a job cost sheet indicating the prime cost, work cost, production cost, cost of sale, and the sales value.
- In 2013, the factory receives an order for a number of jobs. It is estimated that direct materials cost Rs. 1,20,000 and Labour costs Rs 75,000. What should be the price of these jobs if the factory intends to earn the same rate of profit on sales? Apply works overheads as a percentage of direct wages, and administration and selling and distribution overheads as a percentage of works cost. You can use the rates prevailing in the previous year for this purpose.
(b) What is CVP Analysis? Explain uses of CVP Analysis and its Limitations. 07
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Q.4 (a) The Riddhi company Ltd is a manufacturing company having three production 07 Departments X, Y, Z, and two service departments A and B. The following is the budget for the next month:
| Total (Rs) | X | Y | Z | A | B | ||
|---|---|---|---|---|---|---|---|
| Direct Material | 2000 | 4000 | 8000 | 4000 | 2000 | ||
| Direct Wages | 10000 | 4000 | 16000 | 2000 | 4000 | ||
| Factory Rent | 8000 | ||||||
| Power | 5000 | ||||||
| Depreciation | 2000 | ||||||
| Other Overheads | 18000 | ||||||
| Area (Sq. ft.) | 800 | 200 | 100 | 200 | 100 | 200 | |
| Horsepower | 1.40 | 0.50 | 0.40 | 0.20 | 0.15 | 0.25 | |
| Machine-Hour | 18000 | 2000 | 4000 | 8000 | 2000 | 2000 | |
| Capital Value | 20000 | 4000 | 8000 | 4000 | 2000 | 2000 | |
Additional Information: A technical assessment of the apportionment of expenses of service departments is as under:
| X (%) | Y (%) | Z(%) | A (%) | B (%) | |
|---|---|---|---|---|---|
| Service Dept. A | 45 | 15 | 30 | - | 10 |
| Service Dept. B | 60 | 35 | - | 05 | - |
Required
- A Statement showing the distribution of overheads to various departments.
- A Statement showing redistribution of services departments expensed to production departments
- Machine-hour rates of the production departments X, Y and Z.
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(b) Differentiate ABC and Absorption Costing. What are the benefits of ABC over 07 absorption costing?
OR
Q.4 (a) Elaborate in details necessary features for Zero-base budgeting? How do you think 07 Zero-base budgeting can be implemented? Is it practical to implement in Indian
Q5 (a) What is cost plus pricing? Explain the different methods available for pricing the product for external customers. 07
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(b) Define: Standard Costs. Explain in details advantages of Standard Costing System 07 What are the different bases of classification of Variances?
(b) 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 Rs 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 and 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.
Draw up a flexible Administration overhead, Selling & Distribution overhead costs budget, operating t 80%, 90%, 100% and 110% at normal capacity.
OR
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Q.5 (a) Explain in detail the Concept of Opportunity Costs. How does it differ from imputed 07 cost?
(b) The Following data relate to the manufacture of a standard Product during the four weeks 07 ended 27 March 14.
Raw Materials Consumed Rs. 15,000
Direct Wages 9,000
Machine Hours Worked 900
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Machine Hour Rate Rs 5
Administrative overhead 20% of Works Cost
Selling Overheads Re. 0.50 Per Unit
Units Produced 17,100
Units Sold 16000 @ Rs 4 Per Unit
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You are required to
prepare a cost sheet in respect of the above, Showing
- Cost per unit.
- Profit per Unit Sold and Profit for the Period.
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