University of Mumbai 2008 M.Com Accounting and Finance MCom Part - I Advance Cost Accounting - Question Paper

The other relevant data pertaining to the enterprise are as follows : yfa) 40 per cent sales are on cash basis;

(bjT Credit sales are collected in the month following ihe month, of Sale; ic) Cost of Sales (variable/direct) is 60 per cent of'sales, the only other costs being Fixed costs of Rs. 4,500 per month, including Rs\500 depreciation.'

(d)    Stock is maintained at the level required to meet the next (coming)months estimated sales.

(e)    Purchases are all on credit and are paidTn the rrtonth following the month of purchases. You are required to prepare a cash budget for the first quarter of the coming year.

From the following information relating to a Hotel, calculate the room rent to be charged to. give a profit of 25% on cost excluding interest charged on Loan forjhe year ended 31st March, 2008 :

(1)    Salaries of office "staff Rs. 50,0W"peTmonth.p

(2)    Wages of the room attendant : Rs. 20 per day per room. When the room is occupied.

(3)    Lighting, Heating and Power :

(a)    The normal lighting expense for a room for the full month is Rs. 500, when occupied

(b)    Power is used only in winter and the charges are Rs. 200 for a room, when occupied.

(4)    Repairs to Beds and other furnitureRs. 30,000 per annumf"

(5)    Repairs to Hodel Building : Rs. 50,000 per annum. |

(6)    Licence fees : Rs. 12,400 per annum, p

(7)    Sundries : Rs. 10,000 per month. "

(8)    Interior decoration and furnishing : Rs. 1,00,000 per annum. P

(9)    Depreciation @ 5% p.a. is to be charged on Buildings costing Rs. 20,00,000/- and @ 10% p.a. on Equipments.

(10)    Interest to be charged @ 6% p.a. on Investment in Buildings and Equipments amounting to Rs. 25,00,000/-. *

(11)    There are 200 rooms in the Hotel, 80% of the -rooms are generally occupied in summer, 60% in winter and 30% in Rainy seasons The .period of summer, winter and rainy season may be considered to be of 4 months in each case. A month may be assumed of 30 days on an average.

3.    From the following information prepare Process account as per F.I.F.O. assumption

Opening stock    Degree of completion

800 units @ Rs. 6 per unit Rs. 4,800 Material 60%

Labour 40%

Overheads 40%

Transfer from previous Process : 12,000 units costing Rs. 16,350 Transfer to next Process : 9,700 units; Units scrapped 1,300 units Normal loss 10%; Closing stock: 1,800 units Degree of completion

For units scrapped :    For closing stock:

Material 100%    Material 60%

Labour    50%    Labour ' 50%

Overheads 50%    Overheads 50%

Scrap realised Re. 1-00 per unit.

Other information Rs.

Material'    10,500

Labour    20,760

Overheads 16,470

4.    From the following information about sales, calculate :

(a)    Sales value variance

(b)    Sales price variancd

(c)    Sales volume variance(J

(d)    Sales mix variance

(e)    Sales quantity variance.

Marketing manager proposes two alternative plans for the year 2008.

(a)    Increase product A market by 40% (no growth for product B)

(b)    Increase product B market by 100% (no growth for product A)

Company can manage either of the plans without any increase in current level of fixed expenses. Further, Selling and Distribution expenses are 5% of sales realisation.

You are required to :

Present the detailed calculations of costs and revenues of the alternate plans and advise the management - which one to accept.

Con. 4976-AN-1295-08.

6. As on 31st March, 2007, the following balances we^re extracted from books o: ir.e Supreme Manufacturing Company, which follows Non-integrated System of Cost Accounting :

Dr.    Cr.

Rs.    Rs.

Stores Ledger Control A/c.    56,000

Work-in-Progress Control A/c. 60,800 Finished Goods Control A/c. 40,000 General Ledger Control A/c.    1,56,800

Factory overheads are applied to production at 150% of direct wages, any under/over-absorbed overheads being carried forward for adjustment in the subsequent months. All administrative and selling expenses are treated as period costs and charged off to the Profit and Loss Account of the month in which they are incurred.

Show the following accounts in the Company's boons ---------

(a)    General Ledger Control A/c.

(b)    Stores Ledger Control A/c.

(c)    Work-in-Progress Control A/c.

(d)    Finished Goods Stock Control A/c.

(e)    Factory Overhead Control A/c.

(f)    Costing Profit and Loss A/c.

(g)    Trial Balance as at 30th April, 2007.

7.    (a) What is Budget and Budgetary control ?

(b) What are the advantages of Budgetary Control System and what are the essentials of an effective Budgetary Control System ?

8.    Discuss the provisions of Sec. 233 B of the Companies Act, 1956 with regard to

(a)    Qualifications of Cost Auditor

(b)    Disqualifications of Cost Auditor

(c)    Rights of the Cost Auditor

(d)    Duties of Cost Auditor.

9.    Write short notes on : (any four)

(a)    Break Even Chart

(b)    Cost Plus contract

(c)    Treatment of Losses in process costing

(d)    Profit on incomplete contract

(e)    Master Budget

(f)    Margin of safety.