Acharya Nagarjuna University (ANU) 2006 M.Com Commerce IV - ADVANCED COST AND MANAGEMENT ACCOUNTING - Question Paper

Rs. Rs.
Sales (20,000 bottles @ 25 paise each) 5,00,000
Variable costs 3,00,000
Fixed costs 1,00,000
4,00,000
------------
Pre-tax profit 1,00,000
Less: Taxes 35,000
-----------
Profit after tax 65,000

(a) What is the break-even point in amount and units?

(b) Suppose that a plant expansion will add Rs.50,000 to fixed costs and increase capacity by 60 percent. How many bottles would have to be sold after the addition to break-even?

(c) At what level of sales will the company be able to maintain its current pre-tax profit position even after expansion?

(d) The company.s management feels that it should earn at lowest Rs.10,000 (pre-tax per annum) on the new investment. What sales quantity is needed to enable the company to maintain existing profits and earn the minimum needed return on new investments?

(e) Suppose the plant operates at full capacity after the expansions. What profit will be earned?

6. From the subsequent data relating to 2 various vehicles A and B, calculate the cost per running mile:
Vehicle A Vehicle B
Rs. Rs.
Mileage run (annual) 15,000 6,000
Cost of vehicle 25,000 15,000
Road Licence (annual) 750 750
Insurance (annual) 700 400
Garage rent (annual) 600 500
Supervision and Salaries 1,200 1,200
Driver.s wage per hour 3 3
Cost of fuel per gallon 3 3
Miles run per gallon 20 miles 15 miles
Repairs and maintenance per mile Rs.1.65 Rs.2.00
Tyre allocation per mile Rs.0.80 Rs.0.60
Estimated life of vehicles 1,00,000 75,000 miles

Charge interest at 5% per annum on cost of vehicles. The vehicles run 20 miles per hour on an avg..


7. A factory producing article X also produces a by-product Y which further processed into finished product. The joint cost of manufacture is provided below:
Rs.
Materials 50,000
Labour 30,000
Overhead 20,000
following costs are as follows: X Y
Rs. Rs.
Materials 30,000 15,000
Labour 14,000 10,000
Overheads 6,000 5,000
----------------------------
50,000 30,000
Selling prices 1,60,000 80,000

Estimated profits on selling prices for X and Y are 25% and 20% respectively.

Prepare a statement showing the aportionment of joint costs and the process account of X
and Y to show cost of production.

8. Siva Choirs Ltd. manufactures 2 products, Choir Mats and Choir Beds. The expected sales, of the 2 products from January to April 2004 is provided below:
Choir Mat Choir Bed
Units Units
January 1,000 2,800
February 1,200 2,800
March 1,600 1,800
April 2,000 1,800

It is expected that:
(a) There will be no work-in-progress at the end of any month and
(b) Finished units equal to half of the anticipated sales for the next month will be in stock at the end of every month (including December, 2003).

The production cost for the year ending 31.12.2003 is as follows:
Choir Mat Choir Bed
Rs. Rs.
Direct material cost per unit 15 100
Direct wages per unit 5 50
Other overheads per unit 5 50
Total unit cost 25 200

You are needed to compute:
(i) a production budget showing the number of units to be manufactured every month.
(ii) production cost budget for three months (1.1.2004 to 31.3.2004)

part C - (2 X 20 = 40 marks)
ans any 2 of the subsequent.

9. The subsequent figures have been found from the records of a company for the year ended 31.12.2004:
Rs.
Direct materials 1,20,000
Direct wages 1,00,000
Works overhead 60,000
Administration overhead 67,200
Selling overhead 44,800
Distribution overhead 28,000
Profit 1,05,000

A work order has been executed in 2005 and the subsequent expenses have been incurred:

Rs.
Direct materials 2,000
Direct wages 1,000

Assuming that in 2004 the rate of factory overhead has gone up by 20%. Distribution overhead have gone down by 10% and selling and administration overhead have gone up by 12.5%, at what price should the product be sold so as to earn the identical rate of profit on the selling price?

Note: Administration, Selling and Distribution overheads are based on works cost.

10. The subsequent info is available in respect of process B of product Y.
Input 5,000 units at a cost of Rs.25,000
Process material added Rs.12,000
Direct Labour Rs. 8,000
Overheads Rs. 3,000
Normal wastage 5% of input
Scrap value of wastage 2 per unit
Output of process B 4,800 units

Prepare Process B account.

11. The standard labour-mix for producing 100 units of a product is:
4 skilled men @ Rs.3 per hour for 20 hours
6 unskilled men @ Rs.2 per hour for 20 hours

But due to shortage of skilled men, more unskilled men were employed to produce 100 units.

true hours paid for were:
2 skilled men @ Rs.4 per hour for 25 hours
10 unskilled men @ Rs.2.50 per hour for 25 hours.

calculate the labour mix variance.

12. describe Budgetary Control and elaborate the advantages and limitations of Budgetary Control.

Earning:   Approval pending.