SECTION – A

Q1. Distinguish between Management accounting and Financial Accounting.
Q2. What are the methods by which semi variable cost can be split in its fixed and variable elements?
Q3. Medical aid co. manufactures a special product “AID”. The following particulars were collected for the year 1998:
Monthly demand of AID 1,000 units
Cost of placing an order Rs. 100
Annual carrying cost per unit Rs 15
Normal usage 50 units per week.
Minimum usage 25 units per weed
maximum usage 75 units per week
re-order usage 4 to 6 week
Compute from the above :
a. re-order quantity
b. re-order level
c. minimum level
d. maximum level
Q4. What do you understand by JIT?
Q5. Explain the term administrative overheads and briefly discuss three methods of treatment thereof in cost
accounts.

SECTION – B

Q1. How does ABC differ from the traditional costing approach?
Q2. What is service costing? Describe the type of industries in which such a system would be suitable. 2 

Q3. Calculate the cost of each process and total cost production from the data given below:

Process x Process Y Process Z
Materials 2,250 750 300
Labour 1,200 3,000 900
Direct Expenses:
Fuel 300 200 400
Carriage 200 300 100
Work overhead 1,890 2,580 1,875

The indirect expenses Rs. 1,275 should be apportioned on the basis of wages.
Q4. What are the advantages of variable costing?
Q5. What do you mean by break-even analysis and explain its uses and applications?

SECTION – C

Q1. Explain advantages and limitations of budgeting.
Q2. What is transfer prices? What are different types of transfer prices?
Q3. Define expense centre. What is the suitability of the measure of performance in an expense centre?
Q4. Differentiate between ‘sunk’ and ‘avoidable’ costs. What is the relevance of such a distinction for short-run
decisions?
Q5. The details regarding composition and the weekly wage rate of labour force engaged on a job scheduled to be completed in 30 weeks are as follows:
Standard Actual
Category of No. of Weekly wage No. of Weekly wage
Workers Laborers Rate Laborers Rate
Skilled 75 60 70 70
Semi-skilled 45 40 30 50
Unskilled 60 30 80 20
The work is actually completed in 32 weeks. Calculate the various labour cost variances.

CASE STUDY – 1

A Ltd. furnishes the following data relating to the year 2008.
1st half of the year 2nd
Sales (Rs.) 45,000 50,000
half of the year
Total cost (Rs.) 40,000 43,000
Assuming that there is no change in prices and variable cost and that the fixed expenses are incurred equally in the two half year period, calculate-
1. P/V Ratio
2. Fixed expenses
3. Break even sales
4. Percentage of margin of safety to total sales.

CASE STUDY – 2

Goodluck Ltd. is currently operating at 75% of its capacity. In the past two years, the level of operations were 55% and 65% respectively. Presently, the production is 75,000 units. The company is planning for 85% capacity level during 2013 – 2014. The cost details are as follows:
55% 65% 75%
Rs. Rs. Rs.
Direct Materials 11,00,000 13,00,000 15,00,000
Direct labour 5,50,000 6,50,000 7,50,000
factory overheads 2,00,000 2,00,000 2,00,000
Selling overheads 3,10,000 3,30,000 3,50,000
Administrative overheads 3,20,000 3,60,000 4,00,000
————– ————— —————-
24,40,000 28,00,000 31,60,000
————– ————— —————-
Profit is estimated @ 20% on sales.
The following increases in costs are expected during the year.
In percentage
Direct material 8
Direct labour 5
Variable selling overheads 8
Fixed factory overheads 10
Fixed selling overheads 15
Administrative overheads 10

Required: Prepare flexible budget for the period 20X1 – 20X2 at 85% level of capacity. Also ascertain profit and contribution.