National College of Computer Studies



Attempt ALL Question:

Group “A”

Brief Answer Questions: [5×2=10]

1) Explain briefly about the fixed cost with any of its two characteristics.

2) Cost at two different levels of output are as under:

Production Unit Total Cost (Rs)

3000 95,000

8000 170,000

Required: By using high and low point method:

a) Variable cost per unit and amount of fixed cost.

b) Production units when the total cost is Rs 200,000.

3) The standard materials require 480 units @ Rs 5. The actual consumption of material is 600 units and material price @ Rs 6.

Required: Three material variances.

4) Compute debtor’s turnover ratio and average collection period of Prosoerous Ltd. for the year ending 31st march, 2014.

Rs in Lakhs

Net Sales 80

Opening trade debtors 18

Closing trade debtors 14

The sixty days credit is common to the industry to which the company belongs. State whether the debts are being collected efficiently or not. (Assume days in a year 365)

5) The following cash flows are given:

|Year | 0 | 1 | 2 | 3 | 4 | 5 |

|Cash flows (Rs) |(100,000) | 20,000 | 30,000 | 40,000 | 40,000 | 50,000 |

Required: Payback Period.

Group “B”

Short Answer Questions: [4×5=20]

6) The data relating to income statement of a company have been provided to below:

Normal capacity 25,000 units

Production 27,000 units

Sales 28,000 units

Closing inventory 2,000 units

Other information:

Selling price per unit Rs 30

Prime cost per unit Rs 13

Variable mfg. cost per unit Rs 5

Variable selling and administration cost per unit Rs 3

Fixed work overheads Rs 100,000

Fixed office and selling overheads Rs 50,000

Required:

a) Income statement under absorption costing.

b) Reconcile profit under variable costing.

7) A company record has the following results for two period:

Period Cost ( Rs ) Profit ( Rs ) Sales (Rs )

I 130,000 10,000 140,000

II 140,000 20,000 160,000

Required:

i. Profit volume ratio (P/V ratio)

ii. Total amount of fixed cost

iii. Required sales to earn after tax profit of Rs 10,000. Tax rate is 50%

iv. Margin of safety ratio, when after tax profit is Rs 10,000.

8) A manufacturing company received a special order to supply 20,000 units of its product at Rs 8 per unit from a customer. The unit cost of product at normal capacity as follows:

Direct material cost Rs 3

Direct labour cost Rs 2.75

Variable overhead Rs 1.5

Fixed overhead Rs 1

The normal capacity of output is 90,000 units and the company at present producing and selling 75,000 units at Rs 10 per unit. The company cannot produce more than normal capacity.

Required: Differential income statement to decide whether the company should or should not accept the order.

9) A company is considering the replacement of old machine. The existing machine is 5 years old, has current cash salvage value of Rs 30,000 and remaining depreciable life of 10 years. The machine was originally purchased for Rs 75,000 and it is being depreciated at Rs 5000 per year for tax purpose. The new machine will cost Rs 150,000 and will be depreciated on straight line basis over 10 Years with no salvage value. The management of the company anticipated that with expanded operation there will be a need of an additional working capital of Rs 30,000.

The new machine will allow the company to annual sales revenue by Rs 40,000 and annual variable operating cost by Rs 10,000. The company’s tax rate is 50% and its cost of capital is 10%

Required:

a) Net cash outlay (NCO)

b) Incremental annual cash inflow (CFAT)

c) Final year cash inflow

d) Decision regarding replacement of old machine by appreciate method

Group “C”

Comprehensive Answer Questions. [30×1=30]

10) The budget officer of a company is preparing various budgets for three months commencing from Baisakh and has assembled the following data:

i. Assets and liabilities 31st Chaitra, last year

Liabilities (Rs) Assets (Rs)

Accounts payable 280,000

Accrued operating expenses 80,000

Loan on mortgage 492,000

Shareholder’s equity 400,000

Cash balance 100,000

Inventory 560,000

Accounts receivable 392,000

Fixed assets 200,000

Total 12,52,000 12,52,000

ii. Gross profit averages 30 percent of sales. The company has a policy of maintaining sufficient inventory to meet the following month’s sales. Experience has shown that 50% of the purchases are paid in the month of purchase and balance only in the next month.

iii. The actual and budgeted sales for different months are as under:

Months Sales Units Sales (Rs)

Falgun (actual) 18,000 72,000

Chaitra (actual) 20,000 800,000

Baisakh (Budgeted) 20,000 800,000

Jestha (Budgeted) 18,000 720,000

Ashadh (Budgeted) 16,000 640,000

Shrawan (Budgeted) 19,000 760,000

60% of sales are collected in the month of sales, 30% in the next month and remaining 10% in the following next month of sales.

iv. Operating expenses are 10% of gross sales, which are payable after one month. And selling and distribution expenses are 5% of gross sales which are payable in same month.

v. With an expansion purpose, the company is going to purchase a machine in Baisakh costing Rs 200,000.

vi. The company keeps minimum cash balance of Rs 100,000. Cash is excess of Rs 150,000 is invested in government securities. Cash deficiencies are made up by bank, loan which is repaid at earliest available opportunity.

Required:

1. Inventory Purchase Budget

2. Cash Budget

3. Budgeted income statement

4. Budgeted Balance Sheet

5. Cash flow Statement

GOOD LUCK

Attempt ALL Question:

Group “A”

Brief Answer Questions: [5×2=10]

1) Define Break-even point.

2) The following data have been provided regarding output and cost:

|Output | 150 | 300 | 450 | 750 | 1050 |

|Cost (Rs) | 2700 | 3900 | 5100 | 7500 | 9900 |

Required:

a) Segregation of cost by using high-low method.

b) Total cost for 1500 units.

3) The following information has been provided:

Share capital 600,000

Revenue Rs 300,000

Share Premium Rs 150,000

10% debentures Rs 200,000

Sales Rs 1500,000

Required: Capital employed turnover ratio

4) XYZ manufacturing concern which has adopted standard costing furnishes the following information:

a) Standard materials required for 60 tones finished production is 90 units.

b) Standard price per unit Rs 3.5

c) Actual production 180,000 tones

d) Cost of materials purchased Rs 720,000

e) Actual quantity of materials used 240,000 units.

Required: Material variances

5) The following cash flows are given:

|Year |0 |1 |2 |3 |4 |5 |

|Cash flows after tax (Rs) |(100,000) |20,000 |30,000 |40,000 |40,000 |50,000 |

Required: Net Present Value.

Group “B”

Short Answer Questions: [4×5=20]

6) A company provides you the following information:

Normal capacity 200,000 units per year

Standard variable mfg. expenses Rs 20 per unit

Fixed mfg. overhead Rs 300,000

Variable selling expenses Rs 2 per unit

Fixed selling expenses Rs 100,000

Unit Sales price Rs 25

The operating results for the year ending December of the last year were as follows:

Sales 150,000 units

Production 180,000 units

Required:

a) Income statement under absorption costing.

b) Reconciled profit under absorption costing.

7) The cost and sales figures are available:

Particulars Rs

Sales 800,000

Variable cost 560,000

Contribution margin 240,000

Fixed cost 150,000

Profit before tax 90,000

Required:

a) Cost- volume ratio

b) Margin of safety

c) Margin of safety ratio

d) Sales volume is Rs to earn profit @ 15% of sales

e) Sales volume is Rs to earn desire profit after tax of Rs 67,500 (tax rate 25%)

8) A firm selling ball pointed pen normally at Rs 1.50 per price receive an offer from a store for the supply of 50,000 pieces at a unit price of Rs 1. Would you advice the firm to accept the offer considering the following details supplied in respect of production and sales of 100,000 pieces per month?

Material Rs 5,500

Labour Rs 25,000

Overhead Rs 40,000 (258% variable)

Assume that the firm possesses idle capacity to meet the specification of the store.

9) A company decided to replace its old machine with new automated machine. The old machine was purchased for Rs 800,000 5 years ago having life of 15 years with book salvage value of Rs 200,000. The old machine can be sold for Rs 500,000 today or Rs 100,000 at the end of life.

The new automated machine can be purchased for Rs 12, 00,000. The working capital requirement increased by Rs 100,000. The new machine can be sold for Rs 200,000 at the end of 10 years of life. The operating efficiency of the new machine can be save Rs 150,000 as operating expenses per year over the period of life. The company is 40% tax bracket and its required rate of return is 10%.

Required:

a) Net cash outlay (NCO)

b) Annual CFAT

c) Final year CFAT

d) Desirability of the automated new machine.

Group “C”

Comprehensive Answer Questions. [30×1=30]

10) A merchandising company’s opening balance sheet and other operating budgets has been summarized below:

Equity share capital 200,000

A/c payable 9310

Note payable 48,000

Retained profit 50,440

3,07,750

Cash 9500

A/c receivable 14,050

Inventory 6,200

Plant and machinery 278,000

3,07,750

Merchandise purchase and sales budget for first three months of year 5

|Month |Jan |Feb |March |

|Purchase units @ Rs 0.95/unit |31,600 |30,000 |29,200 |

|Sales units @ Rs 2.00/ unit |32,000 |30,000 |30,000 |

Desired ending inventory at the each month is 20% of next month’s sales need and that gives opening stock of Rs 6,400 units and closing stock 5,200 units.

Sales are made 20% for cash and 80% on credit. And 80% of credit sales are collected in the month of sales and rest in the month following the sales. Purchases are paid 70% in the month of purchase made and balance in the month following the purchase.

Note payable, due on December 31, year 5, bears 12% interest payable quarterly. Monthly expenses to be paid as incurred arte budgeted as follows:

|Period expenses |Salaries |Insurance |Depreciation |Utilities |

|Amount (Rs) |3900 |250 |2,200 |850 |

|Selling expenses |5% of sales value each month |

The company expects to purchase a machine for Rs 30,000 for cash down of Rs 10,000 at January end and balance will be paid in two equal installments in next two months.

The company is within 45% tax bracket and taxes will be paid at the end of each quarter. The company will pay interim dividend equal to 20% of MIBT shown by March and income statement.

Required:

a) Projected income statement for March end.

b) Cash budget

c) Balance sheet

d) Cash flow statement

GOOD LUCK

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Set B

Set A

Full Marks: 60

Pass Marks: 30

Time: 3 Hours

National College of Computer Studies

(NCCS-College of IT & Management)

Final Examination (2015)

|BIM/Fifth Semester/ ACC 202: Cost and Management Accounting |

Candidates are required to answer the questions in their own words as far as practicable.

Full Marks: 60

Pass Marks: 30

Time: 3 Hours

National College of Computer Studies

(NCCS-College of IT & Management)

Final Examination (2015)

|BIM/Fifth Semester/ ACC 202: Cost and Management Accounting |

Candidates are required to answer the questions in their own words as far as practicable.

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