M.Com. – I ,Solapur University Question Paper,ADVANCED COSTING (Paper – II) ,2014 Question Paper

Solapur University Question Paper
M.Com. – I (Semester – I) (Old) Examination, 2014
ADVANCED COSTING (Paper – II) (Gr. b)
Day and Date : Monday, 21-4-2014 Total Marks : 50
Time : 3.00 p.m. to 5.00 p.m.
 Instructions : Figures to the right indicate full marks.
All questions are compulsory.
1. Choose the correct alternative : 10
1) The increase or decrease in the total cost due to change in volume of
production is called ______________
a) Relevant Cost b) Differential Cost
c) Incremental Cost d) Opportunity Cost
2) The value of a benefit sacrificed in favour of an alternative course of action is
Valled ______________
a) Marginal Cost b) Standard Cost
c) Opportunity Cost d) Relevant Cost
3) I RW
(C RF) V P −
+ = this formula of fixing a selling price is ____________ pricing
technique.
a) Total unit cost b) Marginal cost
c) Return on Investment d) Standard cost
4) Import parity price is one of the ____________ factors affecting pricing
decisions.
a) External b) Internal c) Cost d) All of the above
5) Standard costing, Budgetary control and variance Analysis are a must for
_______________
a) Cost reduction b) Cost control
c) Marginal cost d) Product Design
6) The excess of selling price over Marginal Cost is referred to as
a) P/V ratio b) Break even point
c) Margin of safety d) Contribution
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7) What will be the profit for sales volume of Rs. 50,000 when the fixed cost are
Rs. 13,000, Variable cost Rs. 15,000, Total cost Rs. 28,000, Net profit
Rs. 2,000 and Net sales Rs. 30,000.
a) Rs. 12,000 b) Rs. 26,000 c) Rs. 13,000 d) Rs. 15,000
8) The Margin of safety is _____________ at Break even point.
a) Greater b) Lesser c) Nil d) Equal
9) A document in which a given problem is examined for the purpose of conveying
information, putting forward ideas and making recommendations as the basis
for action is called a ______________
a) Reporting b) Information c) Data d) Report
10) Manufacturing Cost Report is a ______________ report.
a) Routine b) Special c) Investigative d) Historical
2. A) Write short notes on (any two) : 5
a) Cost control
b) Differential cost
c) General principles of Reports.
B) What do you mean by Reporting ? What are the OBJECTS of reporting. 5
3. A) From the following data calculate Break-even point in terms of units and also
the New Break even point if selling price is reduced by 10% 5
Fixed expenses Rs. Variable expenses Rs.
Depreciation 1,00,000 Material Rs. 3 per unit
Salaries 1,00,000 Labour Rs. 2 per unit
Selling price Rs. 10 per unit
B) Two competing companies ABC Ltd., and XYZ Ltd., produce and sell the
same type of product in the same market. For the year ended March 2009
their forecasted profit and loss a/c are as follows : 5
Particulars ABC Ltd. XYZ Ltd.
Sales 2,50,000 2,50,000
Less : Variable cost 2,00,000 1,50,000
 Fixed Costs + 25,000 – 2,25,000 + 75,000 2,25,000
Forecasted Net profit before tax 25,000 25,000
Your are required to compute :
i) P/V ratio
ii) Break even sales volume
iii) You are also required to state which company is likely to earn greater profits
in conditions of :
a) low demand b) high demand and why ?
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4. Answer any one : 10
A) The following figures are available from the records of Venus Enterprises as
at 31st March :
Particulars 2008 (Rs. in lakhs) 2009 (Rs. in lakhs)
Sales 150 200
Profit 30 50
Calculate :
a) The P/V ratio and total fixed expenses for 2008 and 2009.
b) The break even level of sales.
c) Sales required to earn a profit of Rs. 90 lakhs.
d) Profit or Loss that would arise if the sales were Rs, 280 lakhs.
B) Following information has been made available from the cost records of Shree
Dutt Automibiles Ltd.:
Direct Material Per unit
 x Rs. 8
 y Rs. 6
Direct Wages
 x 24 hrs. @ 25 paise per hr.
 y 16 hrs. @ 25 paise per for
Direct Overheads 150% of wages
Fixed Overheads Rs. 750
Selling price
 x Rs. 25
 y Rs. 20
The directors wanted to be acquainted with the desirability of adopting any one of
the following alternative sales mix in the budget for the next period.
a) 250 units of X and 250 units of Y
b) 400 unit of y only
c) 400 units of x and 100 units of Y
d) 150 units of X and 350 units of Y.
State which of the alternative sales mix you would recommend to the management.
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5. Answer any one : 10
A) Marginal Ltd., provides you the following data regarding two products
manufactured and sold by it.
Particulars Product A (per unit) Product B (per unit)
Selling price Rs. 1,000 Rs. 1,200
Raw Material Cost Rs. 400 Rs. 450
Direct wages Rs. 150 Rs. 100
Direct expenses Rs. 50 Rs. 50
Machine hrs. 1 hr 2 hrs.
1) Assuming variable overheads are negligible which product should be
manufactured assuming the criterion used in maximisation of contribution
per unit.
2) What would be your answer if material A were in short supply ?
3) What would be your answer if company was facing a shortage of production
capacity/machine hrs.
B) A plant is at present operating at 75% capacity and producing 2,40,000 units.
Variable costs per unit are as follows.
Direct material Rs. 1.50, Direct labour. Rs. 2.00 variable overhead Rs. 0.50.
An offer is received from a foreign customer to buy 60,000 units at Rs. 4.50
per unit. Management hesitates to accept the offer because the selling price
is less than the total cost per unit and also because the current selling price
is Rs. 5.25 per unit No change is expected in respect of fixed overheads
which will remain unaltered at full figures.
Administration overheads Rs. 1,80,000 selling and disbursement overheads
Rs 80,000 However the export order will require special packing which will
cost @ Rs. 20 per 100 units.
Advise the Management whether order should be accepted or not.
_____________________

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