No. of Printed Pages : 8 MCO-05

MASTER OF COMMERCE

Term-End Examination co co June, 2011 wzd- CD MCO-05 : ACCOUNTING FOR MANAGERIAL

DECISIONS

Time : 3 hours Maximum Marks : 100

Note : Attempt any five questions. All questions carry equal

marks.

1. Define Accounting. How does it help interested

parties in business ? Also explain briefly the

objective of accounting. 5+10+5=20

2. Explain the role of Ratio Analysis in the

interpretation of financial statements. Also state

the limitations of ratio analysis. 10+10=20

3. What do you mean by Funds Flow Statement ?

Prepare a statement of sources and applications

of funds by taking an imaginary Balance Sheet. 8+12=20

4. Explain briefly the terms 'Standard Cost' and

'Standard Costing'. Enumerate the advantages

and limitations of standard costing system. 6+14=20

MCO-05 1 P.T.O.

5. "A manager requires information about the past

to control and plan for the future." Comment

upon this statement and state how budgeting helps

in this respect ? 10+10=20

6. Define 'marginal costing'. What is its utility in a

large manufacturing concern ? 8+12=20

7. (a) How is the tax liability determined in a

Company ? 8+12=20

(b) Trial Balance of AB Ltd. as on 31st March

2009 (Extracts)

Name of Account Dr. (Z) Cr. (Z)

Advance Income-tax for 2007-08 2,20,000

Advance Income-tax for 2008-09 2,30,000

Provision for Income-tax 2007-08 2,00,000

Adjustments :

(i) The income-tax assessment for 2007-08

completed during the year 'showed

gross tax demand of 2,40,000 but no

effect has been given for this in

accounts.

(ii) Provision for income tax is to be made

for 2,10,000 for 2008-09.

Show relevant extracts in the Final

Accounts of 2008-09.

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8. AB company manufactures two products X and Y 20

and sells them through two zones East and West.

From the following information, prepare a Sales

Budget showing the budgeted and actual sales of

current year.

Product Budgeted Sales Ac tual Sales

East West East West

X 4,000 @ Z 9 6,000 @' 9 5,000 @ Z 9 7,000 @ Z 9

Y 3,000 @ Z 21 5,000 @ Z 21 2,000 @ 21 4,000 @ Z 21

Adequate market studies reveal that product X is

popular but underpriced. It is observed that if

the price of X is increased by 1, it will still find a

ready market. On the other hand, Y is overpriced

and the market could absorb more if sale price of

Y is reduced by 1. The management has agreed

to give effect to the above price changes.

As a result of the above decisions, the

following estimates have been prepared by Zonal

Managers :

Product East West

X + 10% + 5%

Y +20% +10%

With the help of an intensive advertisement

campaign, the following additional sales over the

estimated sales of zonal managers are possible

Product East West

X 600 700

Y 400 500

MCO-05 3 P.T.O.

9. A company produces a product from a single

material. It operates a standard costing system

and furnishes you the following information : 5+5+5+5=20

Particulars Budget Actual Production in units 800 600

Materials :

Total quantity (kg.) 1,600 1,300

Total amount 32,000 27, 300

Labour :

Total Hours 240 200

Total amount 3,000 3,000

You are required to compute the following

variances :

(a) Material Price Variance

(b) Material Usage Variance

(c) Labour Rate Variance

(d) Labour Efficiency Variance

MCO-05 4

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ill 10+10=20

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3Trfi -fq- chlti -1(1.1. 72T131:1701'1 .) fqaTur

qR lI 8+12=20

MCO-05 5 P.T.O.

4. ` .51ITTEF (Imo' * 4 31171c1 cvici fqfeT'

oqRseg --1?-4-4 I 3RTtl fqfq* T1̀4 44-04

*-1* -31N *1-Wf I 6+14=20

5. 4, -) f97:177*Wr A 'Irrt fff4

Trizrr-41-9. t 1" -Fr 31r-drq-9r

7:rIzi-AT -44 TEIT

mql-f 10+10=20

6. #1:rf (1141cf c)_111-cIRT LIFOTr117 WA- I f*--4.

f9-417t 7#217 T:1-4. cHt 6441Picti t? 8+12=20

7. (a) Q.cli .qTfzr -WT f9IftuT f*-7:1 w=1-)i1

fT7:11 \Midi t? 8+12=20

(b) Fcifi-is *31 HI 2009 (3171)

2007-08* fff4 3-TfrAli 3-TrziT7 - 2,20,000

2008-09 t fry 31•1171:1S i c - 2,30,000

2007-08* FrO 3-Pm c HicRTN 2,00,000

HHIgi\31-1 :

(i) c:14 r -g4 2007-08 * 37:T*7

ffftTf7tri 14 7f7:1 2,40,000

r 31T, q(-ci i -41:614T -40

-9fatti>?1' 1tI

MC0-05 6

(ii) 2008-09 * ! 2,10,000 W' aTizr*-{

-51TqqTi t I

2008-09 •Tsi * 3Tr-1:r oici • 377q77:{W

sIfaftdii f1771

8. -1=Elt 'X' 3t{ 'Y' 3777 -7-d1f3thd t 20

4-A17-4 •OTCP-9T-T facer t t F-14-ircifiga77T31i

a~z Trl afrt alt-cirach f ktgoi

t- f-A fqwzi 7-A-a tzi-R 1,1 f iRelch f4A-

ifTql:i trrv-- r X 4,000 @ 9 6,000 @ 9 5,000 @z9 7,000@Z 9 Y 3,000 @ 21 5,000 @ 21 2,000 @z21 4,000@z 21

cimit i IT* 33g -j qiici f"-- X q71 3-Tfw-

(5r TRIT tfw

x r1:fff 7cit qqi kqi sAR t 1417.4

6111 74 *11 3ifiTw

.11FTfr--*-0- 724-r 4r 4-r4 -crT .wi:t c4.)4 ITT t

31-f -ftwzr TrkTrr

77 f Trw-w t 7-41 7cr-bwr

f9-crizff*374R It Or-T:1 TP41-4 w(i 3-TTgrri

dc ti 1#914 X + 10% + 5% Y + 20% + 10%

MCO-05 7 P.T.O.

, i -ft jrcri cni,i9nii t 7771-17-r 74 4F-9--zr -7-4-4ref

gRi 3Tri-97 f-4--1- t af-d-F7-wf Pii-tirchd af-d17-1?r fq-A-

mat:

77rg 0 -9-F-7-14

X 600 700

Y 400 500

9. .) . -1=c1 i1 yen 711:11)1. t TOT 74 -3--e:rg ' --r fit:ft -wtt

t 1 7:g "TIT:i MI id FaRT 3179rth t -21r 3Trcr-A

F-14-iroRgcr 7:0-a-r4 MGI-f 7--d - t : 5+5+5+5=20

cicItUl GI ■31 d 41 I t-cl Will

ctfiq-i (7*-77N14) 800 600

+41444,41 :

err 4-11711 (fir.) 1,600 1,300

kirqi Z 32,000 Z 27,300 To

NTT :

Ta' sTO 240 200

Trftf Z 3,000 Z 3,000

31i9r0 rir;i rci-cRuil 4 Phil T9 t :

(a) TTWIt Tff f-47{17

(b) TITIlt 347 fa7T1IF

(c) $3114 7 "f4-Tcri

(d) %1:1 4,14aTIT-d-r f-q7Tur

MCO-05 8