2017
(September)
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 ‘Cost’, ‘Costing’ and ‘Cost accounting’. Explain briefly the nature and objectives of Cost accounting. 2+2+2+5+5=16
Or
(b) Narrate the concepts of Cost Reduction and Cost Control. State in brief, the advantages as well as dangers of Cost Reduction efforts. 3+3+5+5=16
2. (a) (i) Explain the essential features of process costing. 6
(ii) The Kalyan Transport Company is running four buses between two towns which are fifty kilometers apart. Seating capacity of each bus is 40 passengers.
The following particulars were obtained from their books for a particular month of a year.
Rs. | |
Salaries of office and supervisory staff Wages of drivers, conductors and cleaners Diesel oil and Other oils Repairs and Maintenance Taxation, Insurance etc Depreciation (on Kms. Basis) Interest and other charges | 20,000 30,000 10,000 3,000 2,500 4,000 3,500 |
Actual passengers carried were 75% of the seating capacity. All the four buses run 30 days in the month, each bus made one round trip per day.
Prepare an Operating Cost Sheet for the month showing the cost per passenger-km. 10
(b) Discuss the objectives of reconciliation of cost and financial accounts. Explain the need for reconciliation. 6+10=16
3. (a) What is Common-size Statement? Discuss the features and utility of such a statement. 4+12=16
Or
(b) From the following Balance Sheet of the Popular Co. Ltd. prepare Common-size Balance Sheets and give your comments on the affairs of the company. 10+6=16
Popular Company Limited
Balance Sheet
(Rs. in lakhs)
Liabilities | 2015 | 2015 | Assets | 2015 | 2016 |
Share Capital Reserves Secured Loans Unsecured Loans Current Liabilities | 70 70 25 15 20 | 70 120 20 10 30 | Fixed Assets Current Assets: Stock Debtors Cash | 120 80 40 10 | |
200 | 250 | 200 | 250 |
4. (a) “A device for making financial data more meaningful is to reduce them to ratios.” Elucidate the statement with justifications. 16
Or
(b) From the following Balance Sheet you are required to calculate the ratios mentioned below and comment in relation to each of these ratios:
1) Ratio of External Equities to Total Assets,
2) Ratio of Fixed Assets to Net Worth,
3) Ratio of current Assets to Net Worth. 6+5+5=16
Balance Sheet
As at ………………
Liabilities | Rs. | Assets | Rs. |
6,000 Equity Shares @ Rs. 100 each 7% Debentures Reserves and Surplus Sundry Creditors Bills Payable | 6,00,000 3,00,000 1,60,000 60,000 1,00,000 | Buildings Furniture Machinery Stock Debtors Cash balances | 5,00,000 4,20,000 80,000 1,20,000 60,000 40,000 |
12,20,000 | 12,20,000 |
5. (a) Differentiate between: 8+8=16
1) Fixed working capital and variable working capital.
2) Gross working capital and net working capital.
(b) M/s A.B. & Co. requests you to prepare a statement showing the working capital requirements. They estimate to produce 4,800 units in a year. The following information have been furnished for you.
Elements of Cost | Cost Per unit (Rs.) |
Raw materials Direct labour Overheads | 8 2 6 |
Total cost Profit | 16 4 |
Selling price | 20 |
Raw materials are in stock on an average period of one month. Materials remain in process on an average period of half a month. Finished goods are in stock on an average period of one and a hald months. Customers enjoy one month’s credit while suppliers allow one month’s credit.
Cash in hand expected in Rs. 2,500.
Production is carried out uniformly during the year and wages and overheads accrue evenly. 16
