MBA104 – Financial and Management Accounting

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Master of Business Administration - MBA Semester 1

MBA104 – Financial and Management Accounting

SET-I

Q1.  Following information obtained from a manufacturing company:

Direct Material – 450000

Office Expenses – 120000

Factory Expenses – 90000

Total Sales – 650000

Prime Cost – 450000

25% of the output is in stock

Calculate:

(a) Direct Expenses (b) Factory Cost  (c) Cost of Production   (d) Cost of Sale (e) Profit

Answer. Following information obtained from a manufacturing company:

Direct Material – 450000

Office Expenses – 120000

Factory Expenses – 90000

Total Sales – 650000

Prime Cost – 450000

25% of the output is in stock

Q2.

Assets	Fixed Assets	1500000
	Current Assets	500000

Liabilities	Accounts payable	200000
	Reserve And Surplus	100000
	10% Debentures	300000
	6% Preference Share Capital	300000
	Equity Share Capital	1100000

1. Calculate Debt-Ratio

2. Calculate Debt-equity Ratio

Answer.

1. Debt ratio         = Total liabilities to outsiders/Total assets

                                 = (Debentures + accounts payable)/ (Fixed +current assets)

Q3. Present a Vertical Analysis of ABC Ltd based on the following figures, also interpret the result.

P&L extract for the year ended 31st March, 2017
Particulars	Amount
Sales Less : Cost of Goods Sold Material            Wages            Factory Overheads	1500000 70000 50000 10000
Gross Profit Less : Selling & Distribution overheads            Administrative Overheads	1370000 20000 15000
Earnings before Interest and Tax Less: Interest	1335000 35000
Earnings before Tax Less: Tax	1300000 50000
Net Profit	1250000
Capital Employed	12500000

Answer.

SET-II

Q1. XYZ ltd has recorded a sale of 80000 units in a year, with a selling price of Rs 8 per unit. Moreover, the company has recorded a prime cost and variable overhead to be Rs 3 and Rs 1 respectively. The company had a fixed cost of Rs 100000.

1. Calculate BEP (in Rupees)

2. Calculate MOS

Answer. Sales – 80,000 units per annum

Selling price – Rs.8.00 per unit

Prime cost – Rs

Q2. From the following information and assumption that the balance in hand on 1st Jan 2016 is Rs.1,55,000, prepare a cash budget for January 2016 to June 2016

Month	Materials	Sales	Wages	Sales & Distribution Overhead	Production Overhead	Administrative Overhead
January	60900	154000	25000	10000	12000	2500
February	70000	145000	25900	12000	12000	2700
March	61000	123000	23000	15000	12000	2200
April	71000	113000	32000	19000	13000	4000
May	84000	170000	29500	21000	16000	3500
June	87600	155000	25600	24000	16000	3000

Assume that 60% are cash sales. Assets are to be required in Feb. and April. Therefore, provision should be made for payment of Rs. 26,000 and Rs. 60,000 for the same. An application has been made to a bank for grant of loan of Rs. 50,000 and it is hoped that it will be received in the month of May. It is anticipated that a dividend of Rs. 70,000 will be paid in June. Debtors are allowed 2-month credit. Sales commission @ 3% on sales is to be paid. Creditors (for goods and overhead) grant one month’s credit.

Answer.

Q3. Elucidate how Balance Score Card is useful to management decision making.

(Usefulness of Balance Score card in Management decision making)

Answer. 1. Better Strategic Planning

The Balanced Scorecard provides a powerful framework for building and communicating strategy. The business model is visualised in a Strategy Map which

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