8/2/2019 Accounting for Management ASSIGNMENT

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Accounting for Management ASSIGNMENT

Need to be submitted on Monday along with those two problems

given in class

Answer ALL Questions. NO Choice

PART A

1. Define Management Accounting.

2. Define inventory Turnover Ratio.

3. What do you mean by Margin of safety?

4. Define Target Costing.

5. What is Break Even Point?

6. What are Sunk Costs?

7. Define Cost Centre

8. Define Ratio Analysis.

9. Current Ratio 2.5 Working capital Rs. 300,000 .Find out Current assets and Current

Liabilities.

PART B

10. Explain the Purpose and uses of Management accounting systems.

11. Selected financial figures of Sai and Co. for 3 years are given below:

Particulars YEAR 1 YEAR 2 YEAR 3

G.P ratio 30% 25% 20%

Stock turnover 20 times 25 times 16 times

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Opening stock (Rs.)

30,000 27,000 50,000

Closing stock Rs 40,000 37,800 60,000

Income-tax rate 50% 50% 50%

Administrative expenses in Year 1 amounted to 10% of sales and the annual increase was

10% over the previous year. Prepare a statement of profits in a comparative form for all the 3

years and comment on the reasons for decreases in profitability.

12. Explain the concept, the characteristics and the assumptions of

Marginal costing.

13. SM. Ltd. Produces two products and the budget for 60% level of

activity for the year 1999-2000 gives the following information:

Particulars Product X Product Y

Raw material cost per

unit (Rs.)7.50 3.00

Direct labor cost per unit

(Rs.)

4.00 3.00

Variable overheads per

unit (Rs.)

2.00 1.50

Fixed overheads per unit

(Rs.)

6.00 4.50

Selling price per unit

Rs.)

20.00 15.00

Production and sales

(Units)

4,000 6,000

The Managing Director, not being satisfied with the projected results as

stated above, referred the Budget to the Marketing Director for

improvement of the performance. The Marketing Director proposed that

the sales quantities of products X and Y could each be increased by 50

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% provided the selling prices were reduced by 5% in the case of product

X and 10% in the case of product Y. The price reduction should be

made applicable to the entire quantity of sales of each of the two

products.

Required: (i) Present the overall profitability under the Original Budget

and the Revised Budget after taking the increased sales into

consideration; (ii) Find over-all break-even sales under the Original Budget

and the Revised Budget.

Answer

Accounting for Management ASSIGNMENT

Need to be submitted on Monday along with those two problems given in class

Answer ALL Questions. NO Choice

PART A

Define Management Accounting. Define inventory Turnover Ratio. What do you mean by Margin of safety? Define

Target Costing. What is Break Even Point? What are Sunk Costs? Define Cost Centre Define Ratio Analysis. CurrentRatio 2.5 Working capital Rs. 300,000 .Find out Current assets and Current

Liabilities. PART B

10. Explain the Purpose and uses of Management accounting systems.

11. Selected financial figures of Sai and Co. for 3 years are given below:

Particulars

YEAR 1

YEAR 2

YEAR 3

G.P ratio

30%

25%

20%Stock turnover

20 times

25 times

16 times

Opening stock (Rs.)

30,000

27,000

50,000

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Closing stock Rs

40,000

37,800

60,000

Income-tax rate

50%

50%

50%

Administrative expenses in Year 1 amounted to 10% of sales and the annual increase was 10% over the previous

year. Prepare a statement of profits in a comparative form for all the 3 years and comment on the reasons for

decreases in profitability.

12. Explain the concept, the character istics and the assumptions of Marginal costing.

13. SM. Ltd. Produces two products and the budget for 60% level of activity for the year 1999-2000 gives the

following information:

Particulars

Product X

Product Y

Raw material cost per unit (Rs.)

7.50

3.00

Direct labor cost per unit (Rs.)

4.00

3.00

Variable overheads per unit (Rs.)

2.00

1.50

Fixed overheads per unit (Rs.)

6.00

4.50

Selling price per unit Rs.)

20.00

15.00

Production and sales (Units)

4,000

6,000

The Managing Director, not being satisfied with the projected results as stated above, referred the Budget to the

Marketing Director for improvement of the performance. The Marketing Director proposed that the sales quantities of

products X and Y could each be increased by 50 % provided the selling prices were reduced by 5% in the case of

product X and 10% in the case of product Y. The price reduction should be made applicable to the entire quantity

of sales of each of the two products.

Required: (i) Present the overall profitability under the Original Budget and the Revised Budget after taking the

increased sales into consideration; (ii) Find over-all break-even sales under the Original Budget and the Revised

Budget.