DU SOL M.Com Question Paper 1st Year 2018 Sem 2 Managerial Accounting

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Your Roll No.

414r

M.COM. : SEMESTER-rI (OC) G

Paper 6201

MANAGERIAL ACCOUNTING
Time : 3 Hours
Muximum Marla : 100

(lItrite your Roll No. on the top immediately on receipt of
this question paper.)

Attempt l// questions.

l// questions carry equal marks.
l ' "Management accounting is a segment of accounting that deals specifically
with the accounting
and reporting of information to management." Do you agree to
this statement ? Explain. 20

a
(a) Define Product Cost and period Cost. 5

(b) Explain the concept of Discretionary cost. Give exampres. 5

(c) What are incremental Cost and Sunk Cost. s

(d) Financial Accounting Zs. Management Accounting. 5

2' ABC Limited specializes in the distribution of pharmaceutical products.
It buys from the
pharmaceutical companies and resells to each of the
three different markets :

(l) General supermarket chains
(2) Drugstore chains
(3) Chemist shops.

(2) qtqt
The following data for the month of April in the cunent year in respect of ABC Limited
has
been reported :

Particulars General Supermarket Drugstore chains Chemist shops

Chains

Average revenue Rs. 84975 Rs. 28875 Rs. 5445

per delivery

Average cost of 82500 27s00 4950

good sold per

deliver

Number of deliveries 300 825 2750

In the past ABC Limited has used gross margin percentage to evaluate the relative profitability

of its distribution channel.

The company plans to use activity-based costing for analyzing the profitability of its distribution

channels.

The activity analysis of ABC Limited is as under :

Activity area Cost driver

Customer purchase order processing Purchase orders by customer

Line-item ordering Line-item per purchase order

Store deliverv Store deliveries

Cartons dispatched to stores Cartons dispatched to a store per delivery

Shelf stocking at customer store Hours of shelf stockins

The April current year operating costs (other than cost of good sold of ABC Limited) are

Rs. 8.27.970.

41 4l
(3)
the quantity
to five activity areas' The cost in each area and
These operating costs are assigned
ofthecostallocationbasisusedinthatareaforApril,.uryo\^'S:
Total cost in APril' Total unit of cost allocation
Activify" area
currentYear (Rs.) basis used in April, currentYear

Rs. 2.20,000 5500 orders
Customer Purchase order

processing
1,75,560 58520 line items
Line-item ordering
1,95,250 3905 store deliveries
Store delivery
2,09,000 209000 cartons
Cartons disPatched to store
28.1 60
1760 hours
Shelf stocking at customer store

Other data for April current year
include the following :
Drugstore Chemist
Particulars General SuPermarket
Chain Shop
Chains
990 4125
385
Total number of orders
l4 t2 l0
Average number of line

items per order
825 2750
330
Total number of

store deliveries .

300 80 l6
Average number of

cartons shiPPed Per

store delivery
0.6 0.1
Average number of hours

of shelf stocking

per store delivery

\

(4) 4t 4l
Required :

(l) compute for April current year. gross margin
percentage for each of its three
distribution
channels and compute RST Ltd operating
income.

(2) compute the April current year rate per unit of the
cost allocation base for each of
the five activity areas.

(3) compute the operating income of each distribution channel
in April, current year using
the activity based costing information.
comment on the resurts.

(4) Describe four challenges one would face in assigning the
total April, current year operating
cost of Rs. 827970 of five activity areas.
20

o
(a) The data below relates to Mercury Ltd. which makes
and sells Television Sets : 14

March April
Sales
6000 (units) 12000 (units)

Production
12.000 (units) 6,000 (units)
Selling Price per unit
Rs. 100 Rs. 100

Rs. 1.00,000 Rs. 1.00.000
Fixed production overhead cost,
Rs. l0 Rs. 10
per unit being the predetermined

overhead absorption rate-
Jeltlng, drstnbution and
Rs. 50"000 'Rs. 50,000

adrninistrative cost (all fixed

Variable cost per unit
Rs. 50 Rs. 50

(s) 41 41

Youarerequiredtopresentcomparativestatementforeachmonthusing

(t) AbsorPtion costing
(t,) Ivlarginalcosting.
6
(.h) Distinguish between Absorption and Marginal Costing'
? Discuss the importance of the
profit-volume
What do you unclerstand by profit-volume ratio
20
ratio ancl state how it can be inlproved ?

Or
00
? State the PurPose of
(a)Whatisabreak.evenchart?Highlightprofitareainthegraph
10
constructing such charts'

produces 10'000
(b) A factory engaged in manufacturing Pens is working to 4}yocapacity and
pens per annum. The present cost break up
for one pen is as under :

Material Rs. l0

Labour Rs. 3

Overheads Rs. 5 (60% fixed)

to work the factory aI 50Yo capacit;-"
The selling price is Rs. 20 per pen. If it is decided
the selling price falls by 5% accompanied
the selling price falls bl,3o/o.At 80% capacity,
are required to calculate the profit at 50oh
by a similar fall in the price of material. You
points for the same capacitl'
and 80% capacities and also show break-even
I (.r
production'

,budgetary control' and explain its objectives. Discuss how the functional budgets are
A
T, Define
20
built up taking any one specific example'

(6) 4t4l

Or

Defrne and explain briefly the following terms : Material price variance. Material usage variance,
Material mixture variance. Material yield variance. 20

5. (a) In transfer pricing what is common conflict between a division and a company AS
whole. l0

(b) Write a note on Responsibility Accounting ? 10

a'
Explain the methods of measuring divisional performance. Discuss the merits and
demerits of using profit center and cost center as ways of measuring managerial
performance. 20

4t4l 100