Solapur university MANAGEMENT ACCOUNTING (Compulsory Paper – III) 03 Semester

M.Com. II (Semester – III) Examination, 2014
MANAGEMENT ACCOUNTING (Compulsory Paper – III)
Day and Date : Saturday, 26-4-2014 Max. Marks : 50
Time : 11.00 a.m. to 1.00 p.m.
Instructions :
1) All questions are compulsory.
2) Figures to the right indicate full marks.
1. Choose correct alternative. 10
1) ____________ budget is often the starting budget, since usually the limiting
factor is sales.
a) Sales b) Production c) Material d) Labour
2) ____________ budgets are designed to change with the level of activity
attained.
a) Fixed b) Flexible c) Cash d) Capital
3) If estimated sales of a product is 40000 units, desired closing stock is
7000 units and actual opening stock is 5000 units the production will be
________ units.
a) 40000 b) 41000 c) 42000 d) 43000
4) If sales are Rs. 5,00,000 G.P. Ratio is 20%, then cost of goods sold is Rs.
a) 2,00,000 b) 1,00,000 c) 3,00,000 d) 4,00,000
5) Quick Ratio is also called as ____________ Ratio.
a) Current b) Acid test c) Working capital d) Fast
6) ____________ is a example of Balance Sheet Ratio.
a) Gross Profit Ratio b) Stock Turnover Ratio
c) Interest Coverage Ratio d) Current Ratio
7) Working capital means
a) Current liabilities b) Fixed assets
c) Net Assets d) Net Current Assets

8) Present value method is also called as __________ method.
a) Pay back period b) Average Rate of Return
c) Internal Rate of Return d) Discounted Cash Flow
9) Excess of present value of cash inflows over present value of cash outflows
is
a) Profitability index b) Net present value
c) Net cash flows d) Cost of capital
10) If credit sales are Rs. 10,00,000 and debtors velocity is 73 days then accounts
receivables is Rs.
a) 7,30,000 b) 2,70,000 c) 2,00,000 d) 1,00,000

2. Write short notes. 10
a) Management Accounting V/s Financial Accounting
b) Functions of Management Accounting
3. A) Particulars Project A Project B
Cost of project Rs. 50,000 50,000
Cash flow before Tax.
1st Years Rs. 30,000 10,000
2nd Year Rs. 20,000 20,000
3rd Year Rs. 10,000 30,000
You are required to determine the pay back period of each project and comment.
B) Gross profit Ratio %3
2 16
Gross profit Rs. 30,000
Stock turnover Ratio 5 times
You are require to calculate
1) Sales
2) Cost of goods sold
3) Average inventory. (5+5)
4. A, B, C Ltd. manufactures a single product. The present sales of Rs. 60,000 per
month utilises only 60% of capacity. The following further information is available
Selling price per unit Rs. 10
Variable cost Rs. 3 per unit
Semi variable cost Rs. 6,000 plus Re. 0.50 per unit
Fixed cost Rs. 20,000
You are required to submit statement showing profits at 60% and 70% levels of
activity.
OR
4. X Ltd. proposes to produce 24000 units p.a.
Particulars Cost per unit Rs.
Material 80
Labour 40
Fixed Manufacturing and administration expenses 20
Depreciation 10
Total cost 150
It is estimated that
1) Stock of Material – 1 months average consumption
2) Stock of WIP – 1 months completed units (Materials fully supplied but 50%
converted)
3) Stock of Finished goods – 1 months completed units
4) Credit period allowed to customers – 1 month
5) Credit period allowed by supplier – half month
You are required to determine the amount of working capital required for above
activity. 10

5. Current Ratio 3.5
Liquid Ratio 2.5
Bank overdraft Rs. 10,000
Net current assets Rs. 5,00,000
Fixed assets to net worth 0.80
Reserves and surplus to share capital 0.25
There were no long term loans and fictitious assets, prepare Balance Sheet.
OR
5. Lookahead Ltd. produces and sells a single product. Sales budget for the current
calendar year by quarter is as under.
Quarter Units to be sold
I 12,000
II 15,000
III 16,500
IV 18,000
The year is expected to open with an inventory of 4000 units of finished product
and desired end inventory of finished product is scheduled at one third of the
following quarters sales demand. The year is close with an inventory of
6500 units.
Prepare Production Budget by Quarters. 10
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