NOBEL COLLEGE
(Pokhara University Affiliate)
Sinamangal, Kathmandu
final assessment
Level: Bachelor Semester – Sring Year : 2004
Programme: BCIS Full Marks : 100
Course: Management Accountancy Time : 3hrs.
Candidates are required to give their answer in their own words as far as practicable
The figures in the margin indicate full marks.
Attempt all the questions
1. a. What is Management Accounting? How does it differ from the financial accounting? [8]
b. “Ratios are mechanical & incomplete.” Explain. [7]
2. Pranisha manufacturing company has provided the following data relating to operation for the year ending 2003. [15]
Sales in units 150,000
Selling price per unit Rs. 10
Variable manufacturing cost per unit Rs.4
Fixed factory overhead for the period Rs. 320,000
Marketing and administrative expenses:
Variable per unit of sales Rs. 1.5
Fixed marketing expenses for the period Rs.300,000
Finished goods opening inventory units 24,000
Closing inventory units 34,000
Required:
i. Income statement under variable costing
ii. Income statement under absorption costing
iii. Reconciliation statement so as to explain the cause of the difference between absorption & variable costing.
NOBEL COLLEGE
(Pokhara University Affiliate)
Sinamangal, Kathmandu
Send Up Examination (Set – 2)
Level: Bachelor Semester – Fall
Year: 2004 Programme: BBA Full Marks : 100
Course: Management Accountancy Time : 3hrs.
Candidates are required to give their answer in their own words as far as practicable
The figures in the margin indicate full marks.
Attempt all the questions
1. a) What do you mean by mixed cost? Explain with suitable examples. [8]
b) Explain the causes why the net profit ascertained under absorption costing will not agree with that under marginal costing? [7]
2. Birat match factory has provided the following data relating to operation for the year ending 2003. [15]
Installed capacity (in boxes) 100,000
Normal capacity 75,000
Production during the year 80,000
Sales in boxes 75,000
Ending inventory 6,000
Selling price per unit Rs. 10
Variable manufacturing cost per unit Rs.7
Fixed factory overhead for the period Rs. 75,000
Marketing and administrative expenses:
Variable per box of sales Rs. 0.5
Fixed marketing expenses for the period Rs.37,000
Required:
i. Income statement under variable costing
ii. Income statement under absorption costing
iii. Reconciliation statement so as to explain the cause of the difference between absorption & variable costing.
3. a) A firm has fixed costs of Rs. 10,000. The variable costs in manufacturing each unit of product are direct materials Rs. 4, direct labour Rs. 6.5 & variable overheads Rs. 2.5. The current selling price is Rs. 20 per unit. [3+2+3 =8]
Required:
i. The break-even point in units & value
ii. The break- even point if material cost increase by Rs. 1
iii. What would be the operating income if 2,000 units are sold?
b)
NOBEL COLLEGE
(Pokhara University Affiliate)
Sinamangal, Kathmandu
Send Up Examination (Set – 3)
Level: Bachelor Semester – Fall Year : 2004
Programme: BBA Full Marks : 100
Course: Management Accountancy Time : 3hrs.
Candidates are required to give their answer in their own words as far as practicable
The figures in the margin indicate full marks.
Attempt all the questions
1. a. What is management accounting? What are its limitations? [8]
b. List out & explain the components that make the difference between the master budget prepared by manufacturing organization with that of merchandise organization. [7]
2. On the basis of following information, calculate the net income for the year, using variable & absorption costing. 15]
Sales in units 35,000
Selling price per unit Rs. 20
Variable manufacturing cost per unit Rs.360, 000
Fixed factory overhead for the period Rs. 90,000
Selling and administrative expenses:
Variable Rs. 130,000
Fixed Rs.100, 000
Finished goods inventory units 5,000
Closing inventory units 20,000
3. a) Following informations are supplied to you: [2+3+2 =8]
Variable cost per unit:
Direct material Rs. 4
Direct labour Rs. 6.5
Variable mnf. Overheads Rs. 2.5
The company’s departmental fixed cost per month is Rs. 10,000. The current selling price per unit is Rs. 20. Based on above informations you are required to calculate:
i. The break-even point in units & value.
ii. The break- even point if 15% increase in existing selling price.
iii. What would be the operating income if 2,000 units are sold? (follow original data)
NOBEL COLLEGE
(Pokhara University Affiliate)
Sinamangal, Kathmandu
Send Up Examination (Set –4)
Level: Bachelor Semester – Fall Year : 2004
Programme: BBA Full Marks : 100
Course: Management Accountancy Time : 3hrs.
Candidates are required to give their answer in their own words as far as practicable
The figures in the margin indicate full marks.
Attempt all the questions
1. a. What is management accounting? What is its importance? [8]
b. Break – even analysis is the specific way of presenting and studying the inter relationship between cost-volume and profit. Discuss. [7]
2. The following data were taken from the record of a manufacturing company. [15]
Details | January | February | March |
Production units | 30,000 | 38,000 | 27,000 |
Sales units | 30,000 | 27,000 | 38,000 |
Opening stock | -0- | -0- | 11,000 |
Closing stock | -0- | 11,000 | -0- |
The firm makes a single product the financial details of which are as follows: (based on the normal capacity of 30,000 units)
Selling price per unit Rs. 10
Direct materials Rs. 1.5 per unit
Direct labour Rs. 1 per unit
Production overheads 300% of direct labour
Administrative overheads are fixed at Rs. 25,000 & one third of production overhead are fixed
Required:
i. Operating income statement using marginal costing approach.
ii. Operating income statement using absorption costing approach.
iii. Reasons for the difference in net income if any.
Following information are extracted from the financial statement of Progressive Ltd.
Progressive Ltd.
Balance sheet as on March 31st
20X1 20X2
Fixed Assets (net off Depreciation)................................ 400,000...................... 450,000
Inventory............................................................................ 125,000...................... 150,000
Accounts receivable.......................................................... 65,000........................ 50,000
Cash .................................................................................... 40,000........................ 50,000
Total Assets......................................................................... 630,000...................... 700,000
Equity share capital ........................................................ 100,000...................... 100,000
Debentures......................................................................... 200,000...................... 200,000
Retained profit.................................................................. 150,000...................... 200,000
Sundry creditors................................................................ 90,000...................... 100,000
Bills payable...................................................................... 40,000........................ 50,000
Outstanding wages............................................................. 20,000........................ 30,000
Accrued taxes..................................................................... 30,000........................ 20,000
Total liabilities and owners equity............................... 630,000...................... 700,000
Income statement for 20X2
Details Amounts
Sales ..................................................................................................... ................... 10,00,000
Cost of goods sold:............................................................ 500,000....................................
Administrative and selling expenses....................... 150,000....................................
Depreciation........................................................................ 30,000....................................
Interest......................................................................... 20,000...................... 700,000
Net income before taxes............................................................ ...................... 300,000
Income tax expenses................................................................. ...................... 150,000
Net income after taxes..................................................................... ...................... 150,000
Required:
Prepare cash flow statement (using direct method for operating activities section)
Millennium Communications had cash and cash equivalents of Rs. 20,000 on Dec. 31st 20X1. The following relevant items of cash flow statements are extracted from the recent Cash flow statement:
Rs.
Receipts from sales and collection....................................................................... 900,000
Issue of long-term Loan ........................................................................................ 135,000
Payment for income taxes .................................................................................... 160,000
Purchase of fixed assets......................................................................................... 134,000
Payment to Suppliers and Employees................................................................. 700,000
Payment of Dividends............................................................................................ 17,000
Proceeds from sales of marketable securities .................................................... 190,000
Interest expense all paid in cash........................................................................... 140,000
Cash payments for other investing activities...................................................... 13,000
Purchase of Treasury stock................................................................................... 190,000
Issue of Common Stock for Employees stock plans........................................ 250,000
Retirement of long-term debt................................................................................. 160,000
Required:
Prepare a statement of cash flow for the first 6 months of 20X2, using direct method. The statement should be in proper format, separating activity into the three sections of the statement.
Given the following comparative balance sheets for 2001 and 2002 and income statement for Tika Company for the year 2002:
Comparative Balance Sheets
Dec 01 Dec 02
Cash..................................................................................... 250,000 280,000
Accounts receivable.......................................................... 170,000 300,000
Interest receivable.............................................................. 50,000 20,000
Inventory............................................................................. 70,000 100,000
Land..................................................................................... 280,000 280,000
Equipment.......................................................................... 700,000 800,000
Less: Accumulated depreciation................................... (180,000)....... (150,000)
Investment in Nima Company .................................... 150,000 190,000
Total assets 1,490,000 1,820,000
Accounts payable............................................................... 130,000 140,000
Dividends payable.............................................................. 30,000 60,000
Notes payable (short-term) ...................................... 50,000 200,000
Debentures (long-term)...................................................... 600,000 600,000
Premium on Debentures.................................................... 70,000 50,000
Common stock................................................................... 450,000 550,000
Retained earnings............................................................... 160,000 220,000
Total Liabilities & Equity 1,490,000 1,820,000
Income Statement for the year 2002
Sales....................................................................................................................... 1,100,000
Cost of goods sold.............................................................................................. (600,000)
Gross margin......................................................................................................... 500,000
Investment income ( Nima Company)............................................................ 70,000
Interest income..................................................................................................... 40,000
Depreciation expense......................................................................................... (70,000)
Other operating expenses (all cash)................................................................. (80,000)
Interest expense................................................................................................... (60,000)
Gain on sale of equipment................................................................................. 30,000
Income tax expense........................................................................................... (130,000)
Net income 300,000
Additional information:
1. The only activities in retained earnings were for income and dividends.
2. Equipment purchased for Rs. 80,000 cash.
3. Equipment with a cost of Rs. 130,000 and accumulated depreciation of Rs. 100,000 were sold at a gain of Rs. 30,000.
4. The Investment in Nima Company is an equity investment.
5. The change in notes payable was due to the purchase of equipment for Rs. 150,000; this note is not for trade.
6. The change in common stock was due to the issue of common stock for cash of Rs. 100,000.
Required
Prepare a Statement of Cash Flows for the Tika Company for 2002, using the direct method. The statement should be in proper format, separating activity into the three sections of the statement
Following is the balance sheet of Dutta Brothers Ltd. as at 31st Dec. 20X1 and 31st Dec. 20X2,
Dutta Brothers Ltd.
Balance sheets
Assets 31st Dec.20X1 31st Dec. 20X1
Fixed Assets.......................................................................... 20,000........................ 25,000
Stock .................................................................................... 10,500........................ 12,000
Sundry Debtors..................................................................... 21,000........................ 22,500
Prepaid Rent ......................................................................... 4,000........................... 5,500
Cash .................................................................................... 20,000........................ 22,000
Totals .......................................................................................................................... 75,500 87,000
Liabilities and ownership Interest
Common stock..................................................................... 30,000........................ 35,000
Reserves and surplus .......................................................... 20,000........................ 27,500
Proposed dividend ............................................................... 3,000........................... 4,500
Sundry creditors.................................................................... 7,500........................... 8,000
Liabilities for Unpaid:
Salary and wages.................................................... 6,000........................... 4,500
Trade expenses....................................................... 9,000........................... 7,500
Totals .......................................................................................................................... 75,500 87,000
Additional Information:
1. An old machinery was sold for Rs. 5,000 with an accumulated depreciation of Rs. 4,000
2. Sales during the year were Rs. 92,000, Cost of goods sold was Rs.36,000
3. Expenses for salary and wages and trade expenses were Rs. 9,000 and 18,500 respectively.
4. Rent expenses for the period were Rs. 2,500. Depreciation for the year was Rs. 4,000
5. Cash dividend paid during the year Rs.14,000
6. New machinery costing Rs.13,000 was purchased during the year.
Required:
Prepare a Statement of cash flows for the year ending 31st Dec. 20X2 applying the Direct method.
The cost for 10,000 units of product is given below:
Direct material................................................................................................... Rs.40,000
Direct wages...................................................................................................... Rs.60,000
Direct expenses.................................................................................................. Rs.20,000
Repairs and maintenance................................................................................... Rs.12,000
Insurance........................................................................................................... Rs.15,000
Additional information:
i. The difference in cost for repair and maintenance is Rs.0.05 per unit between 10,000 and 9,000units.
ii. Insurance cost at 9,000units volume amounted to Rs.14,000
Required:
Flexible Budget for 12,000units.
Costs for output level of 6,400 units in a factory are given below:
Variable costs:
Direct material cost .................................................................................. Rs.102,400
Direct labour cost ....................................................................................... Rs.49,600
Direct expenses............................................................................................. Rs.3,200
Fixed costs:
Administrative cost................................................................................ Rs.3,600
Selling and distribution cost ................................................................ Rs.20,200
Unit selling price ......................................................................................... Rs.35
Required:
a) Prepare a Flexible budget for 8,000uints
Based on the following information you are required to calculate three overhead variances.
Normal Capacity.............................................................. 10,000 direct labour hours
Standard time allowed........................................ 0.5 direct labour per unit of output
Actual production.................................................................................... 22,000units
Actual hours worked....................................................................................... 10,700
Factory overhead cost incurred................................................................ Rs.191,000
Fixed overhead cost for normal capacity................................................... Rs.90,000
Standard variable manufacturing overhead rate.................................... Rs.9per hour
The standard material and standard cost per kg of material required for the production of 500 units of product X are as follows:
3,000kgs of material, standard price per kg Rs.5. The actual production and related material data are as follows:
§ Actual production 500kgs of product X
§ Material used 3,200kgs
§ Actual price of material Rs.4.50 per kg.
Required: Calculate:
a) Material cost variance
b) Material price variance
c) Material usage variance (using tabulation approach)
Calculate material price, usage and cost variances (using tabulation approach) from the following particulars:
Standard quantity of material required for one unit of output................................. 10kgs.
Standard price per kg of material................................................................................ Rs.3
Actual material consumed.................................................................................. 10,400kgs
Actual price per kg of material................................................................................. Rs.3.2
Actual production during the period................................................................. 1,000units.
A limited company prepares business budget to exercise control over operation. The sales & purchase figures for recent month and expected for next month are as follow:
Sales for (Rs.) | Purchase for (Rs.) | ||
Baishakh | 200,000 | Jestha | 175,000 |
Jestha | 300,000 | Ashadh | 300,000 |
Ashadh | 350,000 |
Credit sales are 30% of total sales, 50% sales are collected in the following month & balance 50% in the next following month of sales. All purchases are credit purchases, payable in the following month of purchases. Bank loan due for Ashadh is Rs.60,000 and interest due Rs.6,000. Depreciation for Ashadh Rs.10,000, wages due for Ashadh but payable next month Rs.50,000 & other expenses due payable in Ashadh Rs.60,000 cash balance on 31st Jestha Rs.50,000.
Required:
Cash budget showing cash receipt & cash disbursement for the month of Ashadh.
Manju is the manager of an extremely successful gifts shop, Chabahil Gifts, which is operated for the benefit of local charities. From the following data, she wants a cash budget showing expected cash receipts and disbursements for the month of April, and the cash balance expected as April 30, 2047:
§ Bank note due April10: Rs.90,000 plus Rs.4,500 interest.
§ Depreciation for April: Rs.2,000
§ Two-year insurance policy due April 14 for renewal: Rs.1500, to be paid in cash.
§ Planned cash balance, March 31, 2004 " Rs.80,000
§ Merchandise purchases for April Rs.500,000, 40% paid in the month of purchase, 60% paid in the next month.
§ Customer receivables as of March 31: Rs.60,000 from February sales, Rs.450,000 from March sales
§ Payrolls due in April: Rs.90,000
§ Other expenses for April, payable in April: Rs.45,000
§ Accured taxes for April, payable in June: Rs.7,500
§ Sales for April: Rs.1,000,000; half collected in month of sale, 40% in next month, 10% in third month.
§ Accounts payable, March 31, 2004: Rs.450,000
Required:
Prepare the cash budget:
Prepare a statement of estimated cash receipts and disbursements for October 2004 for the Kathmandu Apple Cider Company, which sells one product, raw, unprocessed apple cider, by the case on October 1, 2004, part of the trial balance is;
Cash | Rs.4,800 | |
Accounts receivable | 15,600 | |
Allowance for bad debts | Rs.1,900 | |
Merchandise inventory | 11,500 | |
Accounts payable, merchandise | 7,200 |
The company's purchases are payable within 10 days. Assume that one-third of the purchases of any month are due and paid for in the following month. The unit invoice cost of the merchandise purchase is Rs.12. At the end of each month it is desired to have an inventory equal in units to 50% of the following month's sales in units.
Sales terms include a 1% discount if payment is made by the end of the calendar month. Past experience indicates that 60% of the billings will be collected during the month of sale, 30% in the following calendar month, 6% in the next following calendar month. Four percent will be uncollectible. The company's fiscal year beings August 1.
Unit selling price........................................................................................................ Rs.20
August actual sales................................................................................................... 12,000
September actual sales.............................................................................................. 36,000
October estimated sales............................................................................................ 30,000
November estimated sales........................................................................................ 22,000
Total sales expected in the fiscal year............................................................... Rs.360,000
Exclusive of bad debts, total budgeted selling and general administrative expenses for the fiscal year are estimated at Rs.54,300, of which Rs.16,800 is fixed expenses (inclusive of a Rs.7,200 annual depreciation charge). These fixed expenses are incurred uniformly throughout the year. The balance of the selling and general administrative expenses varies with sales. Expenses are paid as incurred.
The Nepal Lever Limited manufactures and sells two products, soap and Detergent powder. In July 2003, Nepal Lever's budget department gathered the following data in order to project sales and budget requirement for 2004.
i. 2004 Projected sales:
Product | Units | Price |
Soap | 60,000 | Rs.70 |
Detergent power | 40,000 | Rs.100 |
ii. 2004 inventories (in units):
Product | Expected Jan. 1, 2004 | Desired Dec. 31, 2004 |
Soap | 20,000 | 25,000 |
Detergent power | 8,000 | 9,000 |
iii. In order to produce one unit soap and Detergent power, the following raw materials are used:
Amount used per unit | |||
Raw material | Unit | Soap | Detergent power |
A | lb | 4 | 5 |
B | lb | 2 | 3 |
C | each | 1 | |
iv. Projected data for 2004 with respect to raw materials is as follows:
Raw material | Anticipated purchase price | Expected inventories January 1, 2004 | Desired inventories December 31, 2004 |
A | Rs.8 | 32,000 lbs | 36,000 lbs |
B | 5 | 29,000 lbs | 32,000 lbs |
C | 3 | 6,000 each | 7,000 each |
v. Projected direct labour requirements for 2004 and rates are as follows:
Product | Hours per unit | Rate per hour |
Soap | 2 | Rs.9 |
Detergent power | 3 | Rs.9 |
Required: Based upon the above projections and budget requirements for 2004 for soap and Detergent powder, prepare the following budgets ;
a) Sales budget (in rupees)
b) Production budget (in units)
c) Raw materials purchase budget (in quantities)
d) Raw material purchase budget (in rupees)
e) Direct labour budget (in rupees)
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