2015
(August)
COMMERCE
Paper: 103
(Cost and Management Accounting)
Full Marks – 80
Time – Three Hours
The figures in the margin indicate full marks for the questions.
1. (a) Define ‘Costing’ and ‘Cost accounting’. Describe the importance of cost accounting as a managerial tool. 2+4+10=16
Or
(b) Describe the benefits and limitations of Activity-based costing. 8+8=16
2. (a) (i) Distinguish between Job costing and Process costing 8
(ii) The following data relate to a manufacturing concern:
Production Cost of production Normal loss Actual loss Scrap value | = 1,000 units = Rs. 1,850 = 10% of production = 150 units = Re. 0.50 per unit |
Prepare Process Account and Abnormal Loss Account 8
(b) Why it is necessary for reconciliation of cost and financial accounts? State the reasons for differences between profits shown by both the sets of accounts. 6+10=16
3. (a) Prepare a comparative Balance Sheet of X Co. Ltd. from the following data and show the trend percentages: 16
(Amount in lakhs of Rupees)
2010 | 2011 | 2012 | 2013 | 2014 | |
Liabilities and owners’ Equity: Reserves Long term liabilities Current liabilities | 100 73 304 213 | 100 78 316 183 | 135 125 332 235 | 135 125 425 264 | 170 96 478 307 |
Total Liabilities | 690 | 677 | 827 | 949 | 1,051 |
Assets | 2010 | 2011 | 2012 | 2013 | 2014 |
Fixed Assets Current Assets Investments | 154 524 12 | 182 482 13 | 221 591 15 | 270 631 48 | 309 689 53 |
Total Assets | 690 | 677 | 827 | 949 | 1,051 |
Or
(b) What is Common-size Statement? What are its objectives? Describe the utility of such a statement. 4+6+6=16
4. (a) “Ratios are mechanical and incomplete.” Comment on this statement giving justifications in support of your answer. 16
Or
(b) From the following Balance Sheet of a company, you are required to calculate the ratios as given below –
1) Debt-Equity Ratio.
2) Equity Ratio.
3) External Equities to Total Assets Ratio.
4) Fixed Assets or Net Worth Ratio.
5) Current Assets to Net Worth Ratio. 4+(3×4)=16
Balance Sheet
As at ………………
Liabilities | Rs. | Assets | Rs. |
3,000 Equity shares @ Rs. 100 each 7% Debentures Reserve & Surplus Sundry Creditors Bills Payable | 3,00,000 1,50,000 80,000 30,000 50,000 | Buildings Furniture Machinery Stock Debtors Cash balances | 2,50,000 40,000 2,10,000 60,000 30,000 20,000 |
6,10,000 | 6,10,000 |
5. (a) Explain the meaning of working capital. Describe the factors that affect the amount of working capital requirement. 6+10=16
Or
(b) Prepare a statement showing the working capital needed to finance a level of activity of 3,00,000 units of output for the year. The cost structure for the company’s product for the above mentioned activity level is detailed below –
Elements of Cost | Cost per unit |
Raw materials Direct labour Overheads | Rs. 20 5 15 |
Total cost Profit | 40 10 |
Selling price | 50 |
Raw materials are held in stock, on an average for two months. Work-in-progress will approximate to half-a-month’s production. Finished goods remain in warehouse, on an average, for a month. Suppliers of materials extend one month’s credit. Two months credit is normally allowed to debtors. A minimum cash balance of Rs. 25,000 is expected to be maintained. The production pattern is assumed to be uniform during the year. 16
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