ACCOUNTING FOR MANAGERS-KANNUR UNIVERSITY

I Semester M.B.A.Degree (Reg./Supple) Examination, January 2015
                                          (2014 Admn.)
                 MBA 1 C02 : ACCOUNTING FOR MANAGERS
                                       SECTION-A
Answer two question . Each questions carries 13 marks.
1  a) Discuss briefly the basic accounting concepts and fundamental accounting
        assumptions.
                          OR
   b) A firm had the following balances on 1st Jan.1998.
        i)  Provision for bad and doubtful debts Rs.2,500.
        ii)  Provision for discount on debtors Rs.1,200
        iii)  Provision for discount on creditors Rs. 1,000.
            During the year bad debts amounted to Rs.2,000, discount allowed were
             Rs.100 and discounts received were Rs.200. During 1989 bad debts
            amounting to Rs.1,000 were written off while discounts allowed and received
            were Rs.2,000 and Rs 500 respectively.
           Total debtors on December 31st 1998 were Rs.48,000 before writing off
           bad debts, but after allowing discounts.On December 31,1998 the amount
           was Rs.19,000 after writing off the bad debts, but before allowing discounts.
          Total creditors on these two dates were Rs .20,000 and Rs.25,000
          respectively
It is firm's to maintain a provision of 5% against bad and doubtful
debts and 2% for discount on debtors and a Provision of 3% for discount
on creditors.
Show the accounts relating to provision on debtors and provision on
creditors for the  year 1998.
2.  a)  'Management accounting provides immense help in management decision
          making'. Discuss.
                                       OR
     b) On the basis of the following information in respect of an engineering company.
         what is the product mix which will give the highest profit attainable ? Do you
         recommend overtime working up to a maximum of 15000 hours at twice the
        normal wage.
Product Manufactured                                      A                   B                          C

Raw materials per unit                                       10 kg            6 kg                     15 kg

labour hours per unit @ Rs.1/hr                         15                 25                        20

Sales price per unit (Rs)                                    125                100                      200

Maximum production possible (units)                6000              4000                    3000

1,00,000 kg raw materials are available @ Rs.10 per kg. Maximum production
hours are 1,84,000 with facility for a further 15,000 hours on overtime basis at
twice to normal wage rate.

                                      SECTION-B
Answer any six questions in the section. Each question carries 1 mark for part (a)
3 marks for part (b), and 5 marks for part (c).
3.  a) What do you mean by financial accounting ?
     b) Explain different branches of accounting.
     c) Prepare common  size income statement in vertical from the following
        income statement and comment.
                         P and L A/c for the year ended 31-3-99
To cost of sales                          4,91,400 By Gross sales                  8,26,200
To Administrative Exp.                   81,000 (-) Returns                           16,200
To Selling Expenses                    1,62,000                                           8,10,000
To Non  Operating Exp                  10,800 By Non operating income        8,100

To Tax Provision                             36,450
To Proposed Dividend                    7,000
To Retained earning                        29,450
                                                    8,18,100                                      8,18,100
4 a) What is annuity method of depreciation ?
   b) Distinguish between SLM and DBM.
  c)  Kannapuram Cement Ltd. had a debit balance of Rs.8,00,000 in their
       machinery A/C on 1st Jan.1992. The company was charging depreciations
       @ 15% p.a.on dimdnishing balance. on  31-3-1992, apart of the machinery
       purchased on 1-1-1989 at cost of Rs.70,000 was sold for Rs.45,000. New
       machinery was purchased for Rs 80,000 on 1-7-1992 and Rs.6,700 was
       spent for installation. On 31-12-1992  the concern decided to change the
       depreciation method from DBM to SLM .It was also decided to change
       depreciation @ 10% p.a. under the new method.

      Prepare machinery account of the year 1992.
5 a) what is a compound entry?
   b) Explain the traditional classification of accounts with examples.
   c) You are required to prepare manufacturing and trading account from the
        following information provided by Tandon Ltd.:
       Stock f Raw Materials                           Carriage Inward             4,824
       on 1`-3-2014                        3,65,760 Rent and taxes                 7,920
       Purchases of Raw materials    3,12,912  Lighting and heating         4,032

       Stock of Raw materials                Depreciation of Plant                
        on  31-3-2014                   4,44,600     Maintenance of  Plant     38,448
       Work in progress                                   Work salaries                  28,256
        on 1-3-2014                   1,12,536 Store expenses                        5,256
       Work in progress                                     General work expenses 1,00,800
        on 31-3-2014                  1,23,912 Sales                                     10,80,000
      Finished goods stock                            Sales returns                            30 000
        on 1-3-2014                    2,57,616  Sales of scrap                            30,000
      Finished goods stock                          Bad                                             4,200
        on 31-3-2014                  1,52,280  Distribution expenses                   3,600
      Productive wages               2,51`,784
      Unproductive wages                 7,080
       Office rent                               1,200
       Office salaries                          3,000
6  a) What is accrual basis trading ?
    b) What are the objectives associated with horizontal and trend of financial
         statements ?
   c) A factory manufacturing sewing machines has the capacity to produce 500
       machines  per annum. The marginal (variable) cost of each machine is Rs.
       200 and each machine is sold for Rs.250. Fixed overheads are.Rs.12,000
       per anum . Calculate the break-even points for output and sales and show
       what profit will result if out put is 90 of capacity ?
7.a) What is the rational  in preparing balance sheet ?
   b) Explain different types of cost.
   c) From the following data, prepare cost sheet showing cost per unit and profit for
       the year 2013.

      Material consumed                              30,000
 
      Direct wages                                       19,600
       
      Machine hours                                     2,000

      Machine hour rate                                0.50
      Administrative overhead  10%  on work cost selling over head 0.05 paise per  unit
      sold units produced 20,000.
      Units sold at Rs.5 per unit 18,000.
8.a) Define over head.
   b) Explain how you deal with or over absorption of overheads in cost accounts.
   c) Calculate labour hour rate from the following information for department

      i) Annual rent  of a factory having an area of 1000 sq. Feet Rs.27,500, this
         department has 4000 Sq.feet.
     ii) Annual rate of the factory  Rs.24,000
    iii) Annual lighting of the factory having  80 lighting points Rs.10,000 this
         department has 60 light points .
    iv) Meeting  changes of the department  Rs.7,500  per year.
    v) Sundry materials issued to the department for one year Rs,400.
   vi) One fore man looks after the department who is paid a salary of Rs.700
        per month.
    The department has 28 workers. On  an average 3 workers will be on leave.
    it is estimated that the department  will run for 2000 hours per year.
9.  a) Give two examples of indirect materials used a office overheads.
     b) What are the advantages of cost accounting ?
     c) Sweet Dreams Ltd. uses historical cost system and absorb overheads on
        the basis of predetermined rate.The following data are available for the
        year ended 31-3-2014:
      Manufacturing overheads:

                                 Amount actually spent             1,70,000
                                 Amount absorbed                   1,50,000
                                 Cost of goods sold                  3,36,000
                                 Stock of finished goods              96,000
                                 Work in progress                       48,000
       using two methods of disposal of under absorbed over head show the implication
       on the profits of the company under each method.
10.  a)  Define management accounting.
       b)  Explain the tools of management accounting.
       c) Discuss the role and importance of management accounting in the efficient
           working of an organisation.