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Showing posts with label Management Accounting. Show all posts
Showing posts with label Management Accounting. Show all posts

Sunday, May 3, 2009

Management Accounting(New)

Question: The following information is extracted from stores ledger in respect of material X.

Opening Stock

Nil

Purchases

 

Jan. 1

100@Re. 1 per Unit

Jan.20

100@ Re. 2 per Unit

Issues

 

Jan. 22

60 for job W16

Jan. 23

60 for job W17

Complete the receipts and issues valuation by adopting the FIFO, LIFO and Weighted Average method.

Solution: Valuation of receipts: (for all methods)

jan.1(100*1.00) =  Rs. 100

jan.20(100*2.00) = Rs. 200

……………………………..

Total Units =200

Total Cost = Rs. 300

 

Weighted Average Rate = Total Cost / Total Units =300/200= Rs. 1.50 per Unit

 

Valuation of Issues

(1)   Issues

Date

FIFO

LIFO

Weighted Average

Qty.

Unit

Rate

Rs.

Amt.

Rs.

Qty.

Unit

Rate

Rs.

Amt.

Rs.

Qty.

Unit

Rate

Rs.

Amt.

Rs.

Jan. 22-W16

Jan. 23-W17

 

 

 

(2) Closing Stock

60

40

20

 

 

80

1.00

1.00

2.00

 

 

2.00

60.00

40.00

40.00

140.00

 

160.00

60

40

20

 

 

80

2.00

2.00

1.00

 

 

1.00

120.00

80.00

20.00

220.00

 

80.00

60

60

 

 

 

80

1.50

1.50

 

 

 

1.50

90.00

90.00

 

180.00

 

120.00

Wednesday, April 22, 2009

Management Accounting(New)

Multiple and Single Choice Question Answer:-
Question: Cost Accounting basic objectives are:
Answer: Acertainment of cost and profitability, Cost control and Managerial decision making.

Question: Techniques of Management Accounting are
Answer: Marginal Costing, Budgetary Control, Standard Costing and Uniform Costing.

Question: Financial Accounting considers those transactions
a) Which can be expressed in terms of money
b) Which can be referred to as historical form of accounting
c) Which include both cash and credit transactions
d) All of the above
Answer: d

Question: Financial Accounting protects the interest of
a) Investors
b) Suppliers
c) Financial institution and government
d) All of the above
Answer: d

Question: Which concept of accounting proposes that the assets acquired by the organisation are recorded at their cost of acquisition?
a) Cost concept
b) Dual Aspect Concept
c) Mathing concept
d) Business entity concept
Answer: a

Question: Main Causes of depriciation are
a) User factor
b) Time Factor
c) Obsolescence
d) All of the above
Answer: d
Question: Types of quotaion may be
Answer: Single Tender, Limited Tender, Open Tender & Global Tender
Numerical Question specially for Management Accounting
Problem: From the following detail available, calculate Net sales,Prime Cost, Gross profit. Sales of product 7,80,000Rs. sales of returns 30,000Rs. Opening Stock 1,15,275Rs. Purchases 3,83,275Rs. Closing Stock 57,250 Rs.
Solution: Net Sales = total sales - Totol returns of sales
Net sales = 7,80,000-30,000
Net Sales = 7,50,000 Rs.
Prime Cost (Material Consumed) = Opening stock+Purchases-Closing Stock
Prime Cost (Material Consumed) = 1,15,275+3,83,275-57,250
Prime Cost (Material Consumed) = Rs. 44,1300
Gross Profit =Net Sales - Prime Cost
Gross Profit= 7,50,000 - 44,1300
Gross Profit= Rs. 30,8700
Problem: From the books of account of M/s. Sandeep Enterprises, the following details habe been extracted from the year ending March 1994.
Stock of materials -Opening = Rs. 1,88,000
Closing = Rs. 2,00,000
Material Purchased during the year =Rs. 8,32,000
Direct wages paid =Rs. 2,38,400
Indirect Wages = Rs. 16,000
Other Factory Overheads = Rs. 1,84,000
Freight -Inward = Rs 32,000
- Outward = Rs 20,000
From the above details calculate Prime Cost, Factory Overheads.
Solution: Prime Cost is basically material consumed cost.
Direct Material Cost(Prime Cost) = Opening Stock + Purchses - Closing Stock + Freight Inward + Direct wages.
Prime Cost = 1,88,000 + 8,32,000 - 2,00,000 + 32,000 + 2,38,400
Prime Cost = 10,90,400 Rs.
Factory Overheads = Indirect wages + Others( It includes Repairs of Plant & machine , Rent , Taxes, Depriciation, Electricity Charges, Fuel for boiler, manager salary etc.)
Factory Overheads = 16,000 + 1,84,000
Factory Overheads = 2,00,000 Rs.
Problem: An Advertising Agency has received an enquiry for the quotation. Production department states the following requirement of material:
paper - 10 reams@ Rs. 1800 per ream
Ink & Other print material - Rs 5,000
Other Consumables - Rs. 3,000. For photography a professional is hired fee of Rs. 10,000. Payable amout to the employee on following basis :
Artist - 80 Hr paid Rs. 12,000 p.m., CopyWriter - 75 Hr paid Rs. 10,000 p.m., Client Servicing - 30 Hr. paid Rs. 9,000 p.m., Rs. 4000 required for the primary packing material.
Assume month consist of 25 working days and one working day consists of 6 working hours. Production overheads are likely to be 40 % of Direct Cost while selling and administration overheads are likely to be 25% of production Cost.Agency expect the profit of 10 % on basic quotation price.
Solution: First need to calculate the Total Cost then we can calculate the quotation price.
Direct Material Cost = Paper +Ink & other printing material + Other Consumables + Primary packing material
Direct Material Cost = 18,000+5,000+3,000+4,000
Direct Material Cost = Rs. 30,000
Direct Labour Cost = Artist + CopyWriter+ Client Servicing
Direct Labour Cost = (80*1200/150)+(75*10,000/150)+(30*9000/150)
Direct Labour Cost = 6,400 + 5,000 + 1,800
Direct Labour Cost = Rs. 13,200
Direct expenses = Photogrphy Charges= Rs. 10,000
Direct Cost = Direct material Cost + Direct labour Cost + Direct Expanses
Direct Cost = 30,000+ 13,200+10,000
Direct Cost = Rs. 53,200
Production overheads = 40 % Direct Cost
Production overheads = 40*53200/100
Production overheads = Rs. 21,280.
Production Cost = Direct Cost + Production overheads
Production Cost = 53,200 + 21,280
Production Cost = Rs. 74,480
Selling & Administration Overheads = 25 % Production Cost
Selling & Administration Overheads = 25 * 74,480/100
Selling & Administration Overheads = Rs. 18,620
Total Cost = Direct Cost + Production Overheads+ Selling & Administration Overheads
Total Cost = 53,200+ 21,280+18,620
Total Cost = Rs. 93,100
Now to calculate quotation price, lets assume quotation price (X).
Total Cost + Profit = Quotation Price
93,100 + (10*X/1oo) = X
9310000+ 10 X = 100X
90 X = 9310000
X = 9310000/90
X= 103444
Quotation Price is Rs. 103444
Question: A manufacturer uses the 200 units of a components every month and he buys them entirely from outsider supplier. The order placing and receiving cost is Rs. 100 and annual carrying cost is Rs. 12. Calculate Economic Order Quantity.
Answer: Given:
A= Annual requirement of material in units = 200*12
O= cost of placing an order=Rs. 100
C= carrying cost one unit per year= Rs. 12
EOQ= sqrt(2*A*O/C) = sqrt(2*2400*100/12)
EOQ= 200 units
Question: From the following data, Calculate EOQ and Total cost of managing inventory.
Annual Demand= 5000 Units
Ordering Cost = Rs. 60 per Order
Price Per Unit = Rs. 100
Inventory carrying Cost = 15% on average inventory
Solution: EOQ = sqrt(2*A*O/C*i)
A = 5000 Units
O = Rs. 60
C = Rs. 100
i = 15% on average inventory
EOQ= sqrt(2*5000*60/15% of 100)
EOQ = sqrt(600000/15)=200 Units
Total cost of managing inventory will be = Ordering cost + Carrying Cost
Total cost= A*O/Q+Q*C/2=5000*60/200+ 200*15% of 100= 1500+ 1500
Total Cost= Rs. 3000

Fill in the Blanks
Question: Research and Development expenditure is a .............................
Answer: Deferred Revenue expenditure

Question: Discount received from the supplier or allowed to customer for making the early payment of due is termed as ........................
Answer: Cash Account
Question: ................ is quantitative record of receipts, issues and closing balance of an item of material.
Answer: Bin Card


Question: Account of a customer is ..............................
Answer: Personal Account

Question: Goodwill Account, Patents and Trade Marks Account are type of ......................
Answer: Real Account
Question: Assets are equal to the Liabilities implies....................
Answer: Dual Aspect Concept



True/False

Question: Bin Card is maintained by store department while store ledger is maintained by costing department.
Answer: True

Question: Bin Card is not an acconting record but only a quantity record.
Answer: True

Question: Management Accounting is not at all a legal requirement.
Answer: True

Question: Cost Accounting is not at all a legal requirement.
Answer: True

Question: Financial accounting comprises of Profitability Statement and Balance Sheet.
Answer: True

Question: Audit deals with the devising of the internal control system and internal audit system to cover the various operational systems.
Answer: True

Question: Financial Accounting is referred to as the historical form of accounting.
Answer: True

Question: Management Accounting considers only historical cost.
Answer: False

Question: Depriciation calculated by Written Down Method can be zero.
Answer: false

Friday, April 10, 2009

Management Accounting

Multiple Choice & Single choice Question-Answer:

Question: The cost that indicates historical cost, which is incurred in past, is known Answer: Sunk cost

Question:Which of the following budgets may be termed as a long term budget?
Answer:Capital expenditure budget , Research and Development expenditure budget , Budget of a transportation company

Select The Blank

Question: The budget that represents the funds investment for expansion, diversification, etc. is known as ________.
Answer: Capital expenditure budget

Question:The ________ variance is the difference between the actual variable overhead incurred and the standard variable overhead charged to production.
Answer: Total variable overhead

Question: Features of Financial Accounting includes-----------------
Answer: It is a legal requirement , It protects the interest of outsiders , It considers historical transactions