Solapur University Question Paper
M.Com. – II (Sem. – III) Examination, 2014
ADVANCED COSTING (Paper – III) (Group B)
Day and Date : Thursday, 24-4-2014 Max. Marks : 50
Time : 11.00 a.m. to 1.00 p.m.
N. B. : All questions are compulsory.
Figures to the right indicate full marks.
1. Choose correct alternatives : 10
1) Gross working capital means total of _____________
a) Current assets
b) Current liabilities
c) Current assets and current liabilities
d) Fixed assets
2) In margin of safety is Rs. 2,00,000 and P.V. ratio is 25% then profit is
Rs. _____________
a) 25,000 b) 50,000
c) 1,50,000 d) 1,75,000
3) Excess of current assets over current liabilities is called _____________
a) Fixed capital
b) Fixed assets
c) Net assets
d) Net current assets
4) Sales over and above break even sales are called _____________
a) Break even point
b) Margin of safety
c) Angle of incidence
d) Profit
5) Fixed cost is also called as _____________
a) Relevant cost
b) Opportunity cost
c) Period cost
d) Variable cost
SLR-N – 51 -2-
6) Salary, rent, depreciation are the examples of _____________ cost.
a) Marginal
b) Variable
c) Fixed
d) Relevant
7) Profit maximisation and _____________ maximisation are two important
objectives of financial management.
a) Loss
b) Inventory
c) Wealth
d) Debt
8) Proprietors fund is also called as _____________
a) Net worth b) Gross worth
c) Capital employed d) Total assets
9) _____________ ratio shows the ability of the organisation to pay its current
obligations.
a) Current b) Gross profit
c) Net profit d) Liquid
10) Interest coverage ratio = Fixed interest charges
.....................
a) EBIT b) EBT
c) EPS d) EAT
2. A) A manufacturing company finds while the cost of making a component part
is Rs. 10, the same is available in the market at Rs. 9 with assurance of
continuous supply. Give your suggestion whether to make or buy this part.
The cost information is as follows :
Materials Rs. 3.50
Direct labour Rs. 4.00
Other variable expenses Rs. 1.00
Fixed expenses Rs. 1.50
10.00 5
B) Write short notes : 5
a) Functions of financial management.
b) Factors determining the amount of working capital.
-3- SLR-N – 51
3. A) The following particulars are available :
Particulars Product A Product B
Selling price per unitRs. 100 110
Variable cost per unit Rs. 30 23
Consumption of material per unit (kg) 5 4
Comment on the profitability of product (both using same raw material) when
raw material is in short supply. 5
B) Write short notes on : 5
a) Limitations of ratio analysis.
b) Types of working capital.
4. You are furnished undernoted data :
Particulars Product A Product B
Sales 10000 units @ Re. 1 7500 units @ Rs. 1.33
Cost :
Fixed Rs. 2,000 Rs. 5,500
Variable @ Re. 0.60 per unit @ Rs. 0.40 per unit
Determine the effect of profit, if sales of A or B increased in the mixture of total
sales. Assume that idle capacity exists and production of A or B in units can be
increased by 50%.
OR
4. Gross profit Ratio 40%
Gross profit Rs. 3,60,000
Stock velocity – 5 times
Debtors velocity – 73 days
Creditors velocity – 36.5 days
Fixed assets turnover ratio – 4 times
Capital turnover ratio – 2.5 times.
There is no difference in opening and closing stock.
Prepare Balance Sheet. 10
SLR-N – 51 -4-
5. Sales are estimated at Rs. 1,04,000 p.a. The cost of production per unit is
estimated as
Cost per unit Rs.
Raw materials 80
Direct labour 40
Overheads 40
160
Product will be sold at Rs. 200 per unit. The company thinks that the maximum
credit to be allowed to customers will be eight weeks. Other relevant data are
given below.
Raw material stock required 4 weeks
Processing time (W.I.P.) 2 weeks
Finished goods stock 6 weeks
Credit allowed by supplier 4 weeks
Cash and bank balance required Rs. 50,000
Prepare a statement showing working capital required by the company.
OR
5. Vinak Ltd. which produce three products furnishes you the following data for
2008-09.
Products A B C
Selling price per unit Rs. 100 75 50
Profit volume ratio % 10 20 40
Maximum sales potential (units) 40000 25000 10000
Raw material content as % of variable cost 50% 50% 50%
The fixed expenses are estimated at Rs. 6,80,000. The company uses a single
raw material in all the three products. Raw material is in short supply and
availability of which is Rs. 18,00,000.
Set a product mix which will give maximum profit and compute that maximum
profit. 10
_____________________
M.Com. – II (Sem. – III) Examination, 2014
ADVANCED COSTING (Paper – III) (Group B)
Day and Date : Thursday, 24-4-2014 Max. Marks : 50
Time : 11.00 a.m. to 1.00 p.m.
N. B. : All questions are compulsory.
Figures to the right indicate full marks.
1. Choose correct alternatives : 10
1) Gross working capital means total of _____________
a) Current assets
b) Current liabilities
c) Current assets and current liabilities
d) Fixed assets
2) In margin of safety is Rs. 2,00,000 and P.V. ratio is 25% then profit is
Rs. _____________
a) 25,000 b) 50,000
c) 1,50,000 d) 1,75,000
3) Excess of current assets over current liabilities is called _____________
a) Fixed capital
b) Fixed assets
c) Net assets
d) Net current assets
4) Sales over and above break even sales are called _____________
a) Break even point
b) Margin of safety
c) Angle of incidence
d) Profit
5) Fixed cost is also called as _____________
a) Relevant cost
b) Opportunity cost
c) Period cost
d) Variable cost
SLR-N – 51 -2-
6) Salary, rent, depreciation are the examples of _____________ cost.
a) Marginal
b) Variable
c) Fixed
d) Relevant
7) Profit maximisation and _____________ maximisation are two important
objectives of financial management.
a) Loss
b) Inventory
c) Wealth
d) Debt
8) Proprietors fund is also called as _____________
a) Net worth b) Gross worth
c) Capital employed d) Total assets
9) _____________ ratio shows the ability of the organisation to pay its current
obligations.
a) Current b) Gross profit
c) Net profit d) Liquid
10) Interest coverage ratio = Fixed interest charges
.....................
a) EBIT b) EBT
c) EPS d) EAT
2. A) A manufacturing company finds while the cost of making a component part
is Rs. 10, the same is available in the market at Rs. 9 with assurance of
continuous supply. Give your suggestion whether to make or buy this part.
The cost information is as follows :
Materials Rs. 3.50
Direct labour Rs. 4.00
Other variable expenses Rs. 1.00
Fixed expenses Rs. 1.50
10.00 5
B) Write short notes : 5
a) Functions of financial management.
b) Factors determining the amount of working capital.
-3- SLR-N – 51
3. A) The following particulars are available :
Particulars Product A Product B
Selling price per unitRs. 100 110
Variable cost per unit Rs. 30 23
Consumption of material per unit (kg) 5 4
Comment on the profitability of product (both using same raw material) when
raw material is in short supply. 5
B) Write short notes on : 5
a) Limitations of ratio analysis.
b) Types of working capital.
4. You are furnished undernoted data :
Particulars Product A Product B
Sales 10000 units @ Re. 1 7500 units @ Rs. 1.33
Cost :
Fixed Rs. 2,000 Rs. 5,500
Variable @ Re. 0.60 per unit @ Rs. 0.40 per unit
Determine the effect of profit, if sales of A or B increased in the mixture of total
sales. Assume that idle capacity exists and production of A or B in units can be
increased by 50%.
OR
4. Gross profit Ratio 40%
Gross profit Rs. 3,60,000
Stock velocity – 5 times
Debtors velocity – 73 days
Creditors velocity – 36.5 days
Fixed assets turnover ratio – 4 times
Capital turnover ratio – 2.5 times.
There is no difference in opening and closing stock.
Prepare Balance Sheet. 10
SLR-N – 51 -4-
5. Sales are estimated at Rs. 1,04,000 p.a. The cost of production per unit is
estimated as
Cost per unit Rs.
Raw materials 80
Direct labour 40
Overheads 40
160
Product will be sold at Rs. 200 per unit. The company thinks that the maximum
credit to be allowed to customers will be eight weeks. Other relevant data are
given below.
Raw material stock required 4 weeks
Processing time (W.I.P.) 2 weeks
Finished goods stock 6 weeks
Credit allowed by supplier 4 weeks
Cash and bank balance required Rs. 50,000
Prepare a statement showing working capital required by the company.
OR
5. Vinak Ltd. which produce three products furnishes you the following data for
2008-09.
Products A B C
Selling price per unit Rs. 100 75 50
Profit volume ratio % 10 20 40
Maximum sales potential (units) 40000 25000 10000
Raw material content as % of variable cost 50% 50% 50%
The fixed expenses are estimated at Rs. 6,80,000. The company uses a single
raw material in all the three products. Raw material is in short supply and
availability of which is Rs. 18,00,000.
Set a product mix which will give maximum profit and compute that maximum
profit. 10
_____________________
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