No.

of Printed Pages : 8

MCO-05

MASTER OF COMMERCE
Term-End Examination

co co

June, 2011

wzdCD 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 5+10+5=20 objective of accounting. Explain the role of Ratio Analysis in the interpretation of financial statements. Also state the limitations of ratio analysis. 10+10=20

2.

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

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5.

"A manager requires information about the past to control and plan for the future." Comment upon this statement and state how budgeting helps 10+10=20 in this respect ?

6.

Define 'marginal costing'. What is its utility in a 8+12=20 large manufacturing concern ?

7.

(a) How is the tax liability determined in a Company ? 2009 (Extracts) Dr. (Z) Cr. (Z) Name of Account 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. 8+12=20 (b) Trial Balance of AB Ltd. as on 31st March

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8. AB company manufactures two products X and Y 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 X Y A c tual Sales Budgeted Sales West East West East 4,000 @ Z 9 6,000 @' 9 5,000 @ Z 9 7,000 @ Z 9 3,000 @ Z 21 5,000 @ Z 21 2,000 @ 21 4,000 @ Z 21

20

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 + 10% + 5% X 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

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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 Total amount 240 3,000 200 3,000

You are required to compute the following variances : (a) (b) (c) (d) Material Price Variance Material Usage Variance Labour Rate Variance Labour Efficiency Variance

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MCO-05