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Calicut University 2006 M.Com Commerce ACCOUNTING FOR MANAGERIAL ISIONS - Question Paper

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D27048

D 27048    (Pages : 2)    Name................................

Reg. No............................

FIRST SEMESTER M.Com. DEGREE EXAMINATION, NOVEMBER 2006

M.Com. 1-3ACCOUNTING FOR MANAGERIAL DECISIONS

(2004 admissions)

Time ; Three Hours


Maximum : 80 Marks

Part A

Answer all the questions. Each question carries 2 marks.

1.    What do you mean by capital disinvestment ?

2.    Define Management Audit.

3.    Define Marginal Cost.

4.    Define Productivity.

5.    How is margin of safety calculated ?

(5 x 2 10 marks)


Part B

Answer any four of the following. Each question carries 10 marks.

/

6.

Explain the various functions of management accounting.

(5 marks) (5 marks) (5 marks) (5 marks)


(hi What an' f hr tools of management accounting ? Briefly explain each of them.

C\

V-, (as Explain (he various factors affecting productivity.

;bi What is Act ivity Based Costing ? Briefly explain the benefits of ABC.

(a)    Describe the steps involved in the control of capital expenditure in a large organisation.

(5 marks)

(b)    Determine the payback period for a project which requires a cash outlay of Rs. 10,000 and generates cash inflows of Rs. 2,000, Rs. 4,000, Rs. 3,000 and Rs. 2,000 in the first, second, third and fourth year respectively.

(5 marks)

Company X is forced to chooso between two machines A and B. Two machines are designed differently, but have identical capacity and do exactly the same job. Machine A costs Rs. 3,00,000 arid will last for 3 years. It costs Rs. 80,000 per year to run. Machine B is an economy model rusting r>n)y R* 2,00,000 blit will last only for 2 years, and costs Rs. 1,20,000 per year to run. These are n-al cash flows. The costs are forecasted in rupees of constant purchasing power. Ignore tax. Opportunity cost of capital is 10 %. Which machine company X should buy ?

(10 marks)

(ai Define cost control. Explain the steps in cost control.    (4 marks)

!h> What is meant by cost reduction ? Explain the important areas where cost reduction programme can be applied.

(6 marks!

10,

Turn over


2    D 27048

(a)    What is Transfer pricing ? Briefly explain the various methods of transfer pricing,

(5 marks)

(b> What is meant by responsibility centres ? Explain their utility to management. (5 marks)

[4 x 10 - 40 marks]

PartC

Answer any two questions.

Each question carries 15 marks.

12. (a) Briefly explain the Risk Adjusted Discount Rate Method.    (5 marks)

(b)    X Ltd. is considering the purchase of a machine. Two machines are available, E and F. The cost of each machine is Rs. 60,000. Each machine has an expected life of 5 years. Net profits before tax (after depreciation) during the expected life of the machine are given below :

Year

Machine E

Machine F

Rs.

Rs.

1

15,000

5,000

2

20,000

15,000

0

25,000

20,000

4

15,000

30,000

10,000

20,000

Total

Bfi.OOO

90,000

Following the methods of return on investment ascertain which of the alternatives will be morn profitable. The average rate of tax may be taken at 50 %,

(10 marks)

3) (a) Wh.it is PA7 ratio ? Describe its importance.    (5 marks)

(b) There are two similar factories under the same management. The management desires to merge these two plants. The following particulars are available :

Factory J    Factory If

Capacity operation    ...    100 a    60%

Sales    ...    Rs. 300 lakhs    Rs. 120 lakhs

Variable costs    ...    Rs. 220 lakhs    Rs. 90 lakhs

Fixed costs    ...    Rs. 40 lakhs    Rs. 20 lakhs

You an* required to calculate :

(ji What would be the capacity of the merged plant to be operated for the purpose of breakeven 9

(ii) What would he the profitability on working at 75 *''<- of the merged capacity ?

(10 marks)

1-lJ IVr'ii:.- r<i>l iiuiiit and explain its advantage to (.he management, shareholders, consumers and he guvi rnmen 1.

<15 marks l 2 x 1;' - 30 marks|










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