NR

Code No: 302 / MBA

M.B.A. III-Semester Examinations, December-2005/January-2006.

COST AND MANAGEMENT ACCOUNTING

Time :3 hours Max. Marks: 60

Answer any FIVE questions

All questions carry equal marks

1. ‘Management Accounting and Cost Accounting have some areas

which are common and overlapping’. Do you agree? Support your
answer.

2. The Latest Engineering Company has three production departments:

A,B and C and a servicing department D. The actual costs for a period
are as follows:
Rs.
Rent 40,000
Repairs 24,000
Depreciation 18,000
Light 4,000
Supervision 60,000
Insurance 20,000
Employer’s Liability 6,000
Insurance
Power 36,000
Total 208,000

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 The following information is also available about the departments:
A B C D
Area Sq.ft 1500 1100 900 500
No. of 24 16 12 8
workers
Wages (Rs) 8,000 6,000 4,000 2,000
Plant 2,40,000 1,80,000 1,20,000 60,000
value(Rs)
Value of 15,000 9,000 6,000 ---
stock (Rs)

Apportion cost to various departments on the most equitable

method.
3. Prepare cost sheet and tender from the following information:
No. of TV valves manufactured during the year 2004-05 5,000 units
Materials consumed Rs. 90,000 Direct Wages Rs. 60,000
Power and consumables Rs. 12,000 Factory overhead Rs.
15,000
Lighting of factory Rs.5,500
Cost of rectification of Defective work Rs. 3,000
Clerical salaries and management expenses Rs.33,500
Selling expenses Rs.5,500 Sale of scrap Rs.2,000
Plant Repairs Rs.11,500
The net selling price was Rs.68 and all units were sold during the
year.
As from 1.1.2005, the selling price will be reduced to Rs.60 per
unit. It was further estimated that production could be increased by 50
per cent, due to spare capacity. Rates for materials and direct wages
would increase by 10 per cent. Assume that 20,000 units would be
produced and sold during the year 2005-06.

4. The expenses for budgeted production of 10,000 units in a factory are

furnished
below :
Rs. Per unit
Materials 700
Labour 250
Variable overhead 200
Fixed 100

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 overhead(Rs.10,00,000)
Variable expenses (Direct) 50
Selling expenses(20%fixed) 130
Distribution 70
expenses(20%fixed)
Administration expenses(Rs 50
5,00,000)
Total cost per unit (to make 1550
and sell)

Prepare a budget for production of (a) 8000 units (b) 6000 units (c)
indicate cost per unit both the levels. Assume that the administrative
expenses are fixed for all levels of production.

5. From the following particulars, find the (a) material cost variance (b)
material usage variance and (c) material price variance.
Quantity of materials purchased 3000 units
Value of materials purchased Rs.9000
Standard quantity of materials 25 units
required per ton of finished product
Standard rate of materials Rs. 2 per unit
Opening stock of materials Nil
Closing stock of materials 500 units
Finished production during the 80 tons
period

6. a) A factory manufacturing sewing machines has the capacity to

produce 500 machines per annum. The marginal cost of each machine is Rs.
200 and each machine is sold for Rs. 250. Fixed overheads are Rs.12,000 per
annum. Calculate break even points for output and sales. Also show what
profit will result if output is 90 per cent of capacity.

b) What are the limitations of break even point? Explain any four.

7. Write short notes on any three of the following :

a) interfirm comparison b) management audit c) cost
sheet and tender d) standard costing and variance analysis e)
Margin of safety and angle of incidence.

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 8. Suman Manufacturing company’s product passes through two
distinct processes A and B and then to finished stock. It is known from
the past records that wastages occur in the process as under.
In process A, 5% of the units entering the process and in the process B
10% of the units entering the process. The scrap value of wastage in
process A is Rs. 16 per 100 units and in process B, it is Rs. 20 per 100
units. The process figures are
Process A (Rs) Process B (Rs)
Materials consumed 6,000 3,000
Wages 7,000 4,000
Manufacturing 2,000 2,000
expenses
5,000 units were brought into process A costing Rs.5000. The output
were process A 4,700 units and B 4,150 units. Prepare process cost
account showing the cost of output per unit.

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