Management Accounting — DU B.Com. (Hons.) Previous Year Question Papers

(a) Explain the significance of cost reduction in the present economy. Mention (9) some important techniques used for cost control. "The aim of Responsibility accounting is not to place blame. Instead, it is to evaluate performance and provide feedback so that future operations can (9) be improved." Discuss. (c) "Management Accounting is an extension of managerial aspects of cost (9) accounting". Elucidate. 2. (a) Chennai Engineering Ltd. manufactures two products P, and P, by using raw materials A, B, C and D in the proportion as follows : Product P, uses raw materials A and B in the ratio 4:1. Product P, uses raw materials C and D in equal proportions. The finished weight of product P, and P, are equal in the weight of their ingredients. During the month of January, 2020 it is expected that 60 tons of P, and 200 tons of P, will be sold. Actual and budgeted inventories for the month of January, 2020 are as follows: Material Actual Inventory as Budgeted inventory as on 01-01-2020 on 31-01-2020 10 tons 40 tons 200 tons 300 tons Product Pi 10 tons 5 tons 50 tons 60 tons The purchase price of material for the January, 2020 is expected to be as follows : All materials will be purchased in the beginning of January. You are required to prepare : (i) The production budget for the month of January. (ii) The material requirement budget for January. (iii) The materials purchase budget indicating the expenditure for materials (15) for January. (b) Briefly describe any five objectives of budgetary control. (3) (c) The budget manager of Jupiter Electricals Limited is preparing a flexible budget for the accounting year starting from 1" July, 1992. The company produces one product-DETX II. Direct material costs RS. 7 per unit. Direct labour averages Rs. 2.50 per hour and requires 1.6 hours to produce one unit of DETX II. Salesman are paid a commission of Rs. 1 per unit sold. Fixed selling and administrative expenses amount to Rs. 85,000 per year. Manufacturing overhead is estimated in the following amounts under specified conditions of volume : Volume of Production (in units) 1,20,000 1,50,000 Indirect material 2,64,000 3,30,000 Indirect labour 1,50,000 1,87,500 Depreciation - Plant and equipment 90,000 90,000 Engineering services 94,000 94,000 Total manufacturing overhead 9,70,000 11,50,000 Normal capacity is 1,25,000 units Prepare a budget of total cost at 1,40,000 units of production. (12) (d) What do you understand by Zero base budgeting ? How is it different from Traditional Budgeting? Write in brief some advantages of ZBB? 3. ABC Ltd. provides the following information for April, 2015: Budget Actual Man Hours 40,000 43,000 Output per man hour (Units) 3.2 3.0 Number of working days (i) Fixed Overhead Cost Variance (i) Fixed Overhead Expenditure Variance (iii) Fixed Overhead Volume Variance (iv) Fixed Overhead Efficiency Variance (v) Fixed Overhead Capacity Variance (vi) Fixed Overhead Calendar Variance (18)