LLB VI (Sixth) Semester Examination 2014-15

Course Code: LBC601 Paper ID:0934608

Management Accounting

Time: 3 Hours Max. Marks: 70 Max Marks: 75

Note: 1. Attempt any six questions in all. Q. No. 1 is compulsory.

2. Students have option to answer the questions in English or

Hindi.

1. Answer any five of the following (limit your answer to 50 words). (4x5=20)

a) Define management accounting.

b) Define quick ratio.

c) Why preparation of cash flow statement is necessary?

d) Explain marginal costing.

e) What do you understand by break even analysis? Explain with the help of an example.

f) Define target costing.

g) Explain any three types of budgets.

h) Define CVP analysis.

2. Explain the nature and scope of management accounting. (10)

3. For the production of 10000 machines, the following are the budgeted expenses:

Particulars / Per Unit
`.
Direct Material / 60
Variable expenses(direct) / 5
Distribution expenses(20% fixed) / 5
Direct labour / 30
Fixed overhead(`150000) / 15
Selling expenses(10% fixed) / 15
Administrative expenses (fixed for all level `50000) / 5

Prepare the budget for production of 6000 and 7000 machines showing distinctly marginal cost and total cost. (10)

4. Illustrate the managerial applications of marginal costing. (10)

5. The following is the Balance Sheet of UOP Limited, Delhi as on 31-03-215:

Liabilities
Share Capital 7,00,000
General Reserve 50,000
Profit and Loss A/c. 1,50,000
Mortgaged Loan 2,50,000
15% Debentures 2,00,000
Sundry Creditors 1,26,000
Bills Payable 74,000
Total 15,50,000 / Assets
Plant and Machinery 4,00,000
Land and Building 6,00,000
Furniture 1,50,000
Sundry Debtors 1,00,000
Bills Receivables 60,000
Stock 1,48,000
Cash and Bank 92,000
Total 15,50,000

Total sales during the year 20014-15 was amounting 40,00,000 and the gross profit was 25%.

You are required to calculate minimum three ratios each to judge: (10)

a)  Liquidity

b)  Efficiency and

c)  Long Term Solvency of the Company

6. Describe ‘Fund Flow Statement’ and ‘Cash Flow Statement’. Describe their importance in the analysis of the Financial Statements. (10)

7. A Limited, Pune has provided you the following information of Product Deluxe produced and sold during the year 2014-2015: (10)

Particulars Deluxe

Number of units sold 10,000

Sales Price ` 140

Cost (per unit) :

Direct Material ` 50

Direct Labor ` 35

Variable Overheads ` 20

Fixed Overheads ` 30

You are required to find out :

a) Profit Volume Ratio, Break-even Point and Margin Safety and the net amount of profit at the current level of Sales.

b) The sales to earn 20% profit on sales.

8. “Management accounting is an extension of financial accounting.” Comment. (10)