AFM Q-Bank
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ARM QUESTION BANK CEP 1-ACCOUNTING FOR MANAGERS 1. 2. 3. 4. 5.
What What is is Shar Shareh ehol olde ders rs’’ Fund Funds? s? Why depr depreci eciao aon n is not not an expe expense nse in in P & L A/c? A/c? What What is the measur measure e of of Liqui Liquidit dity? y? What What is Good Goodwil will? l? An And d why why is it it wrie wrien n o? o? What What ar are e inve invent ntor orie ies? s?
CEP 2-ADM 1. What What is Li Liqu quid idit ity? y? 2. What What ar are e acv acvit ityy ra rao os? s? 3. Expand Expand DSCR DSCR and Explai Explain n wh where ere it iiss used? used? 4. What What is prop propri riet etar aryy fu fund nd? ? 5. Writ Write e any any two two use usess of ra rao os. s. CEP 2-ACCOUNTING FOR MANAGERS 1. 2. 3. 4. 5.
What What do you unde underst rstand and by by Debt Debt Service Service Cove Coverag rage? e? What What is the the measu measure re of of overal overalll prota protabil bility ity? ? What What is leve levera rage ge? ? What What are are cas cash h equi equiva vale lent nts? s? What What is is min minor orit ityy int inter eres est? t?
CEP 4- ACCOUNTING FOR MANAGERS 1. Why accounng transacons are to be measured in terms of money? 2. Why do accounng pracces need to be conservave? 3. Men may come and go…. But companies go on for ever…. Relate it to one of the Balance Sheet Concepts by naming and explaining. 4. Capital is what is owed by the company to the owners – relate it to the appropriate accounng concept.
CEP II 1. 2. 3. 4. 5.
What What is is a com commo mon n sto stock ck? ? What What are are una unavo void idab able le cos costs ts? ? What What are are cas cash h equi equiva vale lent nts? s? When is a consolidate consolidated d nancial nancial statemen statementt prepared prepared? ? What What is Gros Grosss Marg Margin in? ?
ARM QUESTION BANK
PSG COLLEGE OF TECHNOLOGY: COIMBATORE BE – ELECTRONICS AND COMMUNICATION ENGINEERING 08O081 FINANCIAL AND MANAGERIAL ACCOUNTING Time: 1 Hour
Max Marks:
20 Part A (4 x 2 = 8 Marks) Answer the following: 1. 2. 3. 4.
Name Name any any four four asset assetss and four four liabi liabilit lities ies.. What is a financial financial stateme statement? nt? Name Name any two of them them and and list out out their their uses uses.. What is is deprecia depreciation? tion? When and why why is it it charged charged as an expense? expense? Differentiat Differentiatee between between Equity Equity and and Preferen Preference ce Share Share Capital. Capital. Part B (2 x 6 = 12 Marks)
Answer any 2 of the following: 5. Who are users users of accountin accounting g information information and and for what what purpose purpose do they use accoun accounting ting information? 6. The following following are the balanc balances es extracted extracted from from the books books of of M/s. Sun Motors Motors as on 31st March March 2014. Credit Rs Debit Balances Rs Balances Drawings
40,000
Capital
2,00,000
Cash at Bank
17,000
Sales
1,60,000
Cash in hand
60,000
Sundry Creditor
Wages
10,000
Purchases
20,000
Stock (31.03.2013)
60,000
Buildings
45,000
1,00,000
Sundry Debtors
44,000
Bills Receivable
29,000
Rent
4,500
Commission
2,500
General Expenses
8,000
Furniture
5,000
Suspense Account
5,000 4,05,000
Adjustments: i. Closing Stock Rs.40,000 valued as on 31.03.2014
4,05,000
ARM QUESTION BANK ii. Interest on Capital at 6% to be provided iii. Interest on Drawings at 5% to be provided. iv. Depreciate buildings at the rate of 10% per annum. v. Write off Bad debts Rs. 1,000 vi. Wages yet to be paid Rs. 500
7. From the the following following trail balance balance of a trader, trader, prepare prepare a Trading Trading and Profit Profit and and loss loss account account and Balance sheet Particulars
Debit
Sales Purchases
4,20,000 1,05,000
Printing Charges
2,500
Wages
77,500
Salaries
12,500
Opening Stock
Credit
2,25,000
Carriage Inwards General Expenes
8,800 26,250
Trade Marks
5,000
Rates & taxes
2,500
Capital
1,74,800
Discount Received
1,250
Loan
1,75,000
Buildings
2,00,000
Furniture
25,000
Machinery
50,000
Cash Bank
1,000 30,000 7,71,050
7,71,050
Adjustments:
i. The Closing stock was valued at Rs.3,20,000 ii. Outstanding Salary Rs.10,000 iii. Prepaid Rates & Taxes Rs.500.
ARM QUESTION BANK
PSG COLLEGE OF TECHNOLOGY: COIMBATORE BE – ELECTRONICS AND COMMUNICATION ENGINEERING 08O081 FINANCIAL AND MANAGERIAL ACCOUNTING Max Marks: 20 Part A (4 x 2 = 8 Marks)
Time: 1 Hour
Answer the following: 1. 2. 3. 4.
When andyou huow would wo uld you ydou chturno the the stability stab ility of of an organizatio organization? n? What Wha t do yohow unders und erstan tand bycheck tueck rnover ver rati ratios? os? How a profi profitab tabilit ility y of a compan company y can be be checke checked? d? What What do you unders understan tand d by liq liquid uidity ity?? Part B (2 x 6 = 12 Marks)
Answer any 2 of the following: 5. What is a ratio? ratio? Explain Explain how how ratio analysis analysis can be used used to make make manageria manageriall decisi decisions ons in organizations with relevant examples. 6. Sigma Limited, Limited, manufac manufacturer turerss of Steel pipes, pipes, ingots ingots and billets, billets, are pla planning nning an expans expansion. ion. They are on the look out for export opportunities to the Middle East, and some African Countries. The following following is their profit profit and loss account for the year ending 31 March 2014, and their balance sheet as on that date. st
Dr.
PROFIT AND LOSS ACCOUNT
Cr.
Open Op enin ing g st stoc ock k of fini finishe shed d go good odss
10 10,0 ,00, 0,00 000 0
Openin Ope ning g stock stock of raw materi materials als
5,00,0 5,00,000 00
Closin Closing g stock stock of raw materi materials als
15,00, 15,00,000 000
Purchase of raw materials
30,00,000
Closing stock of finished goods
10,00,000
Direct wages
20,00,000
Profit on sale of shares
Manufacturing expenses
10,00,000
Administration expenses
5,00,000
Selling expenses
5,00,000
and
distribution
Loss on sale of plant
5,50,000
Interest on debentures
1,00,000
Not Profit
Sale Saless
1,00 1,00,0 ,00, 0,00 000 0
38,50,000 1,30,00,00 0
1,30,00,000
BALANCE SHEET Liabilities
Share Capital : Eq Equi uity ty sh shar aree ca capi pita tall Preference share capital Re Rese serv rves es
5,00,000
Rs.
1, 1,00 00,0 ,000 00 1,00,000 1, 1,00 00,0 ,000 00
Assets
Fixed assets St Stoc ock k of raw raw ma mate teria rials ls Stock of finished goods Su Sund ndry ry debt debtor orss
Rs.
2,50,000 1,50 1,50,0 ,000 00 1,00,000 1,00 1,00,0 ,000 00
ARM QUESTION BANK Deb eben entu turres Sundry creditors
2,0 ,00 0,0 ,000 00 50,000
Ban ank k balan alance ce
50,0 50,000 00
6,50,000
6,50,000
As a winter intern at Sigma Limited, you are required to advise the top management on the proposal to expand. Comment on their liquidity, profitability and leverage position after redrafting the balance sheet and calculating the: (i) (i) Gros Grosss Prof Profit it Ra Rati tio o (ii) (ii) Over Overal alll Pr Prof ofit itab abil ilit ity y Rati Ratio o (iii) Current Ratio (iv) Debt-Equity Ratio (v) Stock Turnover Ratio (vi) Liquidity Ratio 7.
Ra Ramu mu Hosi Hosier ery y Limit Limited ed Tiru Tirupp ppur ur,, suppl supplie ierr to a leadi leading ng expo export rter er Halo Halo Inte Intern rnat atio iona nal, l, is bo both ther ered ed abou aboutt its operational position, since the non-quota days are fast approaching. Your Professor, Management consultant to Ramu Hosiery, requires you to help him in analyz ana lyzing ing the compan company’ y’ss operat operating ing po positi sition on by calcul calculati ating ng the follow following ing rat ratios, ios, with with appropriate comments on the same. (a) (b) (c (c))
Current ratio Liquid ratio Oper Operat atin ing g rat ratio
(d) (e) (f) (f)
Return on total resources Turnover of fixed assets St Sto ock turn turnov over er ratio atio
PROFIT AND LOSS ACCOUNT FOR RAMU HOSIERY
To
Opening Stock
To
Purchase
To
In Inci cide dent ntal al Ex Expe pens nses es
To
Gross Profit c/d
9,950
By
Sales
85,000
54,525
By
Closing Stock
14,900
1, 1,42 425 5 34,000 99,000
To
Opening Expenses Selling & Distribution Administration Finance
3,000 15,000 1,500
99,900
By
Gross Profit b/d
By
Non-operating Income:
34,000
Interest
300
Profit on sale of shares
600
19,500
To
NonNon-op oper erat atin ing g Ex Expe pens nses es:: Loss on sale of Assets
To
900
Net Pr Prof ofit it
400 15,0 15,000 00 34,900
34,900
BALANCE SHEET Liabilities
Issued Capital : 2,0 ,000 00 Equi Equity ty Sh Shar arees of Rs.1 s.10 each each
Rs.
20,0 20,000 00
Assets
Land and Building Pl Plan antt & Machi achin nery ery
Rs.
15,000 8,000 ,000
ARM QUESTION BANK Reserve Curr Cu rren entt Liab Liabil ilit itie iess Prof Profit it & Loss Loss A/c A/c
9,000 13,0 13,000 00 6, 6,00 000 0
Stock-in-trade Sund Sundry ry De Debt btor orss Ca Cash sh & Bank Bank Bala Balanc ncee
48,000
14,900 7,10 7,100 0 3,00 3,000 0 48,000
Roll No: (To be filled in by the candidate) PSG COLLEGE OF TECHNOLOGY, COIMBATORE - 641 004
SEMESTER EXAMINATIONS,
PGDM (FULL TIME)
NOVEMBER, 2014
Semester : I
12GP14 MANAGEMENT ACCOUNTING Time : 3 Hours
Maximum Marks : 100
INSTRUCTIONS:
A, Answer any 5 quesons from PART - B AND 1. Answer ALL ALL quesons from PART – A, Answer any 3 Quesons from PART C. Queson Q ueson under PART – D is compulsory. 2. FOR PART A Write the Alphabet of your choice answer for each queson in the Main Answer Book
Part A (20 x 1 = 20 Marks)
1. Magic Magic Compan Company y owns a fixed fixed asse assett with an origi original nal cost cost of Rs.100, Rs.100,000 000.. Magi Magicc Company estimates it will use the asset for 4 years, at which time the asset can be sold for Rs.10,000. The book value of the asset after two years of use is: a. Rs.55,000 b. Rs.50,000 c. Rs.45,000 d. Rs. s.10 100, 0,00 000 0 2. High High Chaparr Cha parral al Company' Comp any'ss has capital capita is currently curren tly trading tradincluded ing for Rs.22 Rs.2 2 perthe share. The Chaparral Company thel stock following accounts within owners' equity section of the balance sheet: Capital stock, Rs.5.00 par value, 10,000 shares issued Rs.50,000 Capital in excess excess of par par value value 1,10,000 Assuming that the only transaction affecting these accounts was the issue of the company's capital stock, the High Chaparral Company originally sold its capital stock for: a. Rs. Rs.5. 5.00 00 pe perr ssha hare re b. Rs.11.00 per share c. Rs. Rs.16 16.0 .00 0 per per shar sharee d. Rs.2 Rs.22. 2.00 00 per per sh shar aree 3. ________ ____________ _______ ___ is the system system which which applies applies costs to like like products products that are usually usually mass produced in continuous fashion through a series of production processes. a. Pr Proc oces esss cos costi ting ng
ARM QUESTION BANK b. Variable costing c. Jo Jobb-or orde derr cost costin ing g d. JIT JIT cost osting 4. ________ ____________ ________ ____ is an example example of a product product that would would not be manufactur manufactured ed using process costing. a. Flour b. Glass c. Toothpaste d. A building 5. For next year, year, Iverson Iverson Company Company has budgete budgeted d sales of 30,000 30,000 units, units, target target ending finished goods inventory of 1,000 units, and a beginning finished goods inventory of 800 units. All other inventories are zero. __________ should be produced. a. 29, 29,800 uni nitts b. 30,000 units c. 30, 30,200 uni nitts d. 31, 31,800 uni nitts 6. Florida Company Company expects expects a total total of Rs.10,000 Rs.10,000 in in sales in May, of these, these, Rs.4,000 Rs.4,000 sales are expected to be for cash. Collections Collections are 50% in the month of sale, 40% in the month following following the sale, and 5% two months following following the sale. The remaining remaining 5% is expected expected to be uncollectible. uncollectible. ___________ is the estimated estimated cash collection collection in May from May sales. a. b. c. d.
Rs.4,000 Rs.10,000 Rs.7,000 Rs.5,000
7. Jerry Jerry Company Company planned planned to produce produce 12,000 units. units. This This level of activiti activities es requi required red 20 set-ups at a cost of Rs.18,000 Rs.18,000 plus Rs.500 per set-up. Actual sales sales were 10,000 units, uni ts, re requi quiri ring ng 15 set-u set-ups ps an and d 12,000 12,000 mach machine ine hours. hours. Actu Actual al set-up set-up cost cost was was Rs.26,000. __________ is the master budget variance for set-ups. a. b. c. d.
Rs.2 Rs.2,5 ,500 00 favo favora rabl blee Rs.2,500 unfavorable Rs.2 Rs.2,0 ,000 00 favo favora rabl blee Rs.2 Rs.2,0 ,000 00 unfa unfavo vora rabl blee
8. A varia variance the theeddiffe differenc rence betwe between: a. nce a budget buis dgeted amount amo unteand a bench ben: enchmar mark k amount amount b. the required number of inputs in puts for the number of outputs ou tputs c. an actu actual al resul resultt and a bud budget geted ed amoun amountt d. a budgete budgeted d amount amount and a standard standard amount amount 9. Joe Smith Smith has paid paid off the mortg mortgage age on his house house and contin continues ues to live live in the house. house. The interest income forgone by not selling the house and investing the proceeds is an example of a(n): a. sunk cost b. detrimental cost c. op oppo port rtun unit ity y cos costt d. out outlay cost ost
10. _____________________a _____________________are re a qualitative qualitative factor of a make-or-buy make-or-buy decision.
ARM QUESTION BANK a. Vari Variabl ablee manuf manufact acturi uring ng cost costss b. Avoidable costs c. Long Long term term relation relationship ship with with suppl supplier ierss d. Oppo Opport rtun unit ity y cost costss 11. Future costs are relevant relevant in decision decision making when: a. they they exc exceed eed fu futur turee reve revenue nuess b. they are not based on estimates e stimates c. they they differ differ bet betwe ween en alte alterna rnati tives ves d. they are the same same betwe between en alte alternat rnative ivess 12. Which of the following following is the key question in deci decision sion making? a. What What are the fixed fixed costs costs of each each alt alterna ernativ tive? e? b. What are the past costs of each eac h alternative? c. What What differ difference ence will will the the choice choice make? make? d. What What are are the the irre irrele levan vantt costs costs?? 13. _______________ _______________ is (are) the primary consideration consideration in choosing among accounting accounting systems and methods. a. Simpl pliicit ity y b. Behavioral implications c. The The costcost-ben benef efit it balan balance ce d. Comp Comput uter eriz izat atio ion n 14. Babbling Brook Brook Hospital hasyear. overall overal l variable of patient-da 75% of total revenues costss of Rs.400 cost lakhs lakhs per There The re are costs 40,000 40,000 patien t-days ys estima est imated tedand for fixed next year. The break-even point expressed in total revenue is: a. Rs.1600 600 llaakhs b. Rs.400 lakhs c. Rs.100 lakhs khs d. Rs. Rs. 15 150 0 lakh lakhs. s. 15. Costs that may be essential essential to the long-run achievement achievement of the organization's organization's goals, but that managers can almost a lmost reduce to zero in the sh short ort run, are called: a. engi engine neer ered ed cost costss b. mixed costs c. comm commit itte ted d fixe fixed d cost costs. s. d. discre discreti tiona onary ry fixe fixed d cost costss 16. Treasur Treasury y stock is: a. unissued unissued shares shares of of a corpora corporatio tion’s n’s own own stock stock b. shares of a corporation’s stock which wh ich have been issued issu ed and subsequently repurchased by the corporation c. ownership rights in in other companies companies held by the corporation corporation for investment investment purposes d. shares shares of a corporat corporation’ ion’ss stock held held by the board board of directo directors rs 17. ________ ____________ _______ ___ are investm investments ents that the company company buys only with the intent to resell them shortly. a. Bonds b. Trading securities c. Avail Availab able le-fo -forr-sal salee securit securitie iess d. Options 18. Identify which which of the following statements statements regarding job-order job-order costing is true. a. Job-orde Job-orderr costing costing deals deals with with great great masses masses of of like like units. units. b. Job-order costing is an averaging process. proces s.
ARM QUESTION BANK c. In job-orde job-orderr costing costing the measur measuree of productio production n is small, small, whereas whereas in process process costing the measure of production is large. d. Job-order costing is one of the two common common systems of product product costing. costing. 19. Bing Company reported reported sales of Rs.1,80,000, an increase in accounts recei receivable vable of Rs.15,0 Rs. 15,000, 00, and a decreas decreasee in cash of Rs.20,0 Rs.20,000. 00. ________ ____________ ________ ________ ____ was received from Bing Company’s customers. a. Rs. s.1, 1,95 95,,000 000 b. Rs.1,65,000 c. Rs. s.2, 2,00 00,,000 000 d. Rs. s.1, 1,60 60,,000 000
20. The stockholders’ stockholders’ equity section of a corporation’s corporation’s balance sheet can be divided into: a. b. c. d.
net incom incomee and and reta retain ined ed earn earning ingss retained earnings and paid-in capital net incom income, e, retai retained ned earni earnings, ngs, and and paid-i paid-in n capita capitall paid-i paid-in n capit capital al and and net net inc incom omee
Part B (5 x 6 = 30 Marks) 21. The William Wallace Wallace Company has gathered the following following information information for the year ended December 31, 20X0: Sales Rs.67,000 Direct materials used 12,900 Direct labor 5,200 Fixed: Factory overhead 6,400 Selling expenses 5,300 Administrative ex expenses 3,700 Variable: Factory overhead 3,300 Selling expenses 9,700 Administrative ex expenses 2,300
There were no beginning beginning or ending inventories. Calculate Calculate Operating Income Income using Absorption Costing and Marginal Costing approach.
22. Letterman Letterman Company has gathered the following following information: information: March 31 ending cash balance Rs.80,000 Depreciation ex expense for April Rs.12,000 Dividends pa paid iin n Ap April Rs.55,000 Cash coll ollecti tio ons in in Apr Apriil Rs.5,10 5,10,,000 000 Equipment purchase for cash in April Rs.94,500 Cash Ca sh paid paid for operat operatin ing g expe expense nsess in Apri Aprill Rs.1 Rs.1,8 ,85,5 5,500 00 Merchandise paid for in AprilRs.1,80,000
Letterman Company requires a minimum cash balance of Rs.80,000. Prepare Prepare a cash budget budget for April, and comment on whether or not minimum cash balance requirements are met.
ARM QUESTION BANK
23. Bulger Corporation Corporation has been been producing producing and selling 40,000 40,000 hats a year. year. The Bulger Bulger Corporation Corporat ion has the capacity to produce 50,000 50,000 hats with its present faci facilities. lities. The following information is also available: Selling price per unit Variable costs per unit: Manufacturing Selling and Administrative Fixed costs in total: Manufacturing Selling and Administrative
Rs.30 11 5 Rs.1,28,000 56,000
If a special order is accepted for 10,000 hats at a price of Rs.25 per unit, What would be its net income?
24. What are the businesses that are likely likely to use job costing or process costing systems? systems? Give relevant examples for both. 25. Retread Company Company manufactures manufactures running running shoes. The selling selling price per pair of shoes shoes (one unit) averages Rs.80 Rs.80 and variable costs per pair are Rs.47.50. The sales volume of Rs.7,76,000 produces Rs.1,00,750 of net income before taxes. a. Comp Compute ute total total fi fixed xed co costs sts.. b. Compute total variable costs. co sts. c. Compute Compute the break-ev break-even en point point in unit units. s. d. Compute Compute the quanti quantity ty of units above above breakeve breakeven n to reach targeted targeted net incom incomee before taxes. 26. Why are more and more organizations in both manufacturing manufacturing and nonmanufacturing nonmanufacturing industries adopting activity-based costing systems? Part C (3 x 10 = 30 Marks)
27. The following following data are available Lakshmi Electric Electric for a yearly period. Fixed Expenses: Wages and salaries Rent, rates and taxes Deprecation Sundry administrative expenses Semi-variable Expenses (at 50% capacity): Maintenance and repairs Indirect labor Sales department salaries, etc. Sundry administrative salaries Variable MaExpenses terials (at 50% of capacity):
Rs.(lakhs) 5.5 2.6 3.4 2.5 of 1.5 5.9 1.8 1.8
16.7
ARM QUESTION BANK Labor 15.4 Other expenses 5.9 Total Cost 63.0 Assume that the fixed expenses remain constant for all levels of production: semivariable expenses remain constant between 40% and 60% of capacity, increasing by 10% between 60% and 80% capacity and by 20% between 80% and 100 100% % capacity.
Rs. (lakhs)
Sale Saless at va vari riou ouss leve levels ls are:
125
50% capacity
145
60% capacity
175
75% capacity
200
90% capacity
220
100% capacity Prepare a flexible budget for the year and forecast the profit at 60%, 75%, 90% and 100% capacity. 28. The income statement statement and comparative balance balance sheets for Big Valley Company are presented below. Construct a statement of cash cas h flows using the indirect metho method. d. Big Valley Company Income Statement For the Year Ended 12/31/X6 Sales Less expenses: Cost of goods soldRs.3,11,000 Depreciation expense 14,000 Amortization expense 3,000 Wage expense 88,000 Rent ex expense 24,000 In Inte tere rest st expe expens nsee 4, 4,90 900 0 Income tax expense 56,000 Loss on sale of fixed asset (2,600) Total expenses Net Income
(4,98,300)
Rs.87,700
12/31/20X6 12/31/20X5 12/31/20X6 12 12/31/20X5 Current assets: Current liabilities: Cash Rs.19,900 Rs.16,300 A/c payable Rs.27,700 Accounts receivable 36,300 27,900 Wages payable 6,200 Inventory 48,200 53 5 3,900 In I nterest payable 1,600 Pr Prep epai aid d rent rent 2,00 2, 000 0 1,8 1,800 00 Taxes axes paya payabl blee 6, 6,80 800 0 7, 7,90 900 0 Rs.106,400 Rs R s.99,900 Rs.42,300 Long-term assets:
Rs.5,86,000
Long-term liabilities:
Rs.21,100 5,700 400 Rs.35,100
ARM QUESTION BANK Land Rs.32,000 Fixed assets Rs.71,100 Accum. depr.
Rs.22,000 Bonds payable 130,000 118,000 (46,000)
(39,000)
44,000 36,000 Rs.86,300
Owners' equity:
Patent
12,000 11 1 1,000 Co C ommon stock Rs.35,000 Rs.32,000 Rs.1,28,000 Rs.1,2 8,000 Rs.1,12,000 Rs.1,12,000 Retained Retained income 1,13,100 1,08,800 Rs. s.1, 1,48 48,,10 100 0 Rs.1 Rs.1,4 ,40, 0,80 800 0 Total liabilities and Total assets 2,34,400 2,11,900 owners' equity 2 2,,34,400 2,11,900 No land was sold in 20X6, and any land purchased was acquired by issuing bonds payable. A fixed asset as set was sold for Rs.4,100.
29. Bryan Bryantt Corpo Corporat ratio ion n us uses es a jo joint int process process to produc producee produc products ts A, B, an and d C. Each Each product may be sold at split-off or processed further and then sold. Joint processing costs for the year amounted to Rs.100,000. Other information is presented below: Separable Processing Sales Value Costs after Sales Value Product at Split-off Split-off at Completion A B C
Rs.94,000 Rs.28,000 60,000 8,000 82,000 66,000 14,000 80,000
Rs.1,16,000
Required: a. Which Which products products,, if any, any, should should be proces processed sed furth further? er? b. If all three products were wer e processed further, what would be the effect on profits?
30. Laguna Company Company operates operates a wine outlet in a tourist tourist area. One-gallon One-gallon bottles sell sell for Rs.18. Daily fixed fixed costs are Rs.4,500, Rs.4,500, and variable variable costs are are Rs.9 per gallon. gallon. An average aver age of 750 gallons gallons is sold each each day. Laguna Laguna Company Company has a capacit capacity y of 800 gallons per day. Required: a. Determ ermine the av aveerag rage cost per per gall allon. b. A bus loaded with 40 senior citizens stops by at closing time and the tour director offers Laguna Company Rs.450 for 40 gallons. Laguna Company refuses, saying they would lose Rs.3.75 Rs.3.75 on each each gallon. Is Laguna Company Company correct correct about the the Rs.3.75? Rs.3.75? Why or why not? c. A fund fund-r -rai aisi sing ng orga organi niza zati tion on has has offer offered ed Lag Lagun unaa Compa Company ny a oneone-ye year ar con contr trac actt to buy buy 300 gallons a day for Rs.10.75 each. Should they accept the offer? Why or why not? Part D (1 x 20 = 20 Marks)
ARM QUESTION BANK 31. The The foll followi owing ng is th thee balan balance ce sheet sheet of Si Silv lver er Comp Compan any. y. Analy Analyze ze it caref careful ully ly and prepare a financial report with relevant answers to the liquidity, solvency, stability and profitability of the company. Silver Company Balance Sheet December 31, 20X6 and 20X5 12/31/20X6 12/31/20X5 Current assets: Cash Rs.24,800 Rs.17,600 Accou Ac counts nts recei receiva vable ble 57,600 57,600 44,80 44,800 0 Supplies 4,000 4,800 Inventory 1,26,400 1,04,800 Pr Prep epai aid d in insu sura ranc ncee 12 12,,80 800 0 16,8 16,800 00 Tota To tall curren currentt asset assetss Rs.2, Rs.2,25, 25,600 600 Rs.1 Rs.1,8 ,88,8 8,800 00 Long-term assets: Fixed assets Rs.6,40,000 Rs.5,68,000 Accu Ac cumu mula late ted d de depr prec ecia iati tion on (3 (3,0 ,08, 8,80 800) 0) (2 (2,5 ,51, 1,20 200) 0) Patent Pat ent 40,000 40, 000 52,000 52, 000 Total long-term assets Rs.3,71,200 Rs.3,68,800 Total assets Rs.5,96,800 Rs.5,57,600 Current liabilities: Accounts payable Rs.47,200 Rs.40,800 Wages payable 35,200 49,600 Interest payable 8,000 9,600 Taxes payable 31,200 20,800 Total current liabilities Rs.1,21,600 Rs.1,20,800 Rs.1 ,20,800 Long-term liabilities: Bonds payable 2,24,000 Total liabilities
2,48,000 Rs.3,45,600
Stockholders' equity: Common stock Rs.1,28,000 Retained Retain ed income incom e 1,23,200 1,23, 200 Total stockholders' equity Tota To tall li liab abil iliti ities es and stock stockhol holder ders' s' equit equity y
Rs.3,68,800
Rs.1,20,000 68,800 68,80 0 Rs.2,51,200
Rs.5 Rs.5,9 ,96,8 6,800 00
Rs.5, Rs.5,57, 57,600 600
Silver Company Income Statement For the Year Ended December 31, 20X6 Sales Less: Cost of goods sold Gross profit Less operating expenses: Wage expense Supply expense
Rs.2,39,200 20,000
Rs.1,88,800
Rs.9,16,800 (3,91,200) Rs.5,25,600
ARM QUESTION BANK Insurance expense Depreciation expense Amortization expense Rent expense expe nse
19,200 57,600 12,000 33,600 33,60 0 Operating income Interest expense Income before taxes Income tax expense Net income
(3,81,600) Rs.1,44,000 (24,000) Rs.1,20,000 (48,000) Rs.72,000
Roll No: (To be filled in by the candidate) PSG COLLEGE OF TECHNOLOGY, COIMBATORE - 641 004 SEMESTER EXAMINATIONS, EXAMINATIONS, OCT/NOV 2014
BE (ECE) (ECE)
Semester: V
08O081 FINANACIAL AND MANAGERIAL ACCOUNTING 08O081 Time : 3 Hours INSTRUCTIONS:
Maximum Marks: 100
1. Group I and Group Group II questions questions should be answered answered in the the Main Answer Book. 2. Answ nswer any 6 questions in Group II. 3. Answer ALL questions in Group I and Group III. 4. Group II III – Multiple Choice questions - (which will be given to the candidates half an hour before the scheduled close of the examination) should be answered only in the space provided in the Main Answer Answ er Book. Book . GROUP I
1. What is importa importance nce of rati ratio o analys analysis? is?
2. Why are budget budgetss prep prepare ared? d?
3. What do you you underst understand and by by liquid liquidity ity of a firm firm??
Marks: 10 x 3 = 30
ARM QUESTION BANK
4. How cost cost account accounting ing helps helps in interna internall decision decision making making of a firm? firm?
5. As an engineer engineer how how would would you use use accounting accounting informati information on for the the betterment betterment of your organization?
6. Unit sales sales of Product Product X are currently currently 10,000, while unit unit sales of Product Y are double double those of Product X. Assuming sales of Product X increase by 10% and those of Product Y go up by 4,000 units. What will be the company's sales forecast for Product X and Product Y?
7. The followi following ng is the income income statem statement ent for Nickla Nicklaus us Company. Company. Sales (only credit sales) Rs.1,606.0 Less: Cost of goods sold 1,062.0 Gross profit Rs.544.0 Less: Operating expenses 322.0 Operating income Rs.222.0 Less other expense: Interest 9.6 Income before tax Rs.212.4 Less: Income Inco me tax expense expen se 85.0 Net income Rs.127.4 Find the gross profit rate for Nicklaus Company?
8. Executive Executive Ambience Ambience Company Company sells sells desks desks at Rs.480 per desk. desk. The costs associated associated with each desk are as follows: Direct materials Rs.195 Direct labor 126 Variable factory overhead 51 Total fixed costs for the period are Rs.456,840. Find the contribution-margin ratio.
9. Doghouse Company had the following following informat information: ion: At a manufactu manufacturing ring level level of 5,000 units, variable and fixed manufacturing costs are Rs.30 and Rs.8 per unit, respectively. Selling price is Rs.60 per unit. What is the total manufacturing cost for 15,000 units?
ARM QUESTION BANK 10. Ruby Corporation Corporation has the following sales budget for the last six months of 20X0: July Rs.100,000 October Rs.90,000 August 80,000 No N ovember 100,000 September 110,000 December 94,000 Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale 25% of sales collected in month following sale 8% of sales collected in second month following sale 2% of sales are uncollectible What is the expected cash collection in October?
GROUP II
Marks: 6 x 6 x 10 = 60
11. Given the following following year-end balances, balances, prepare a Profit and Loss Account. Accounts payable Rs.2,550 Acco Ac coun unts ts rece receiv ivab able le 3,55 3,550 0 Accu Ac cumu mula late ted d depr deprec ecia iati tion on 6,25 6, 250 0 Begi Be ginn nnin ing g reta retain ined ed in inco come me 6,45 6,450 0 Cash 2,300 Cost of goods sold 52,300 Deprecia Depr eciatio tion n expense 2,500 2,500 Divid vidends nds dec declared red 8,800 Fixed as assets 29,000 Inco Incom me tax tax expe expens nsee 10 10,,70 700 0 Interest expense 1,150 Inventory 6,250 Long-term note payable 11,500 Paid-in capital 4,450 Prepaid rent 350 Rent Re nt expe expens nsee 4,00 4,000 0 Sales 118,600 Wage expense expense 31,900 31,900 Wages payable
3,000
12. Given the following following balances for Garvey Company Company on December 31, 20X5, prepar preparee a classified balance sheet. Accum ccumul ulat ated ed depre depreci ciat atio ion n Rs. s.21 21,8 ,800 00 Accounts pa payable 11,200 Acco Ac coun unts ts rec recei eiva vabl blee 9, 9,80 800 0 Addi dditiona onal pai paidd-iin cap capiital 24, 4,00 000 0 Capit apital al stoc stock k 6, 6,00 000 0 Cash 7,400 Fixed as assets 89,400 Interest payable 2,400
ARM QUESTION BANK Inventory 13,600 Long-term note payable 28,000 Prepaid rent 2,500 Retained earnings 22,900 Wages payable 6,400
13. The following following are the income statements and balance balance sheets for Coors Company: 20X2 Sales (only credit sales) Rs.1,606.0 Less cost of goods sold 1,062.0 Gros ross pr pro ofit fit Rs.544. 44.0 Less op operating ex expenses 322.0 Operating iin ncome Rs.222.0 Lesss other Les other expense: expense: Interes Interestt 9.6 Income before tax Rs.212.4 Less income tax expense 85.0 Net income Rs.127.4 20X2 20X1 20X2 20X1 Current assets:Current liab: Cash Rs.36 Rs.38 Accts pa payable Rs.98 Rs.64 Accts receivable 180 144 Wages payable 18 16 Inventory 120 100 Taxes payable 28 4 Prepaid rent 20 24 Current portion Total current assets Rs.356 Rs.306 of long-term debt 30 6 Long-term assets: Total current Fixed assets Rs.320 Rs.316 liabilities Rs.174 Rs.90 Accum. deprec. (206) (180) Long-term liabilities 66 92 Tota otal lon longg-tterm as asset setsRs. sRs.114 114 Rs.136 Tota otal li liaabil bilities Rs.240 Rs. s.1 182 Owners' equity: Common stock, Rs.5 par Rs.80 Rs.80 Retained income 150 180 Tota To tall own owner ers’ s’ equi equity ty Rs.2 Rs.230 30 Rs.2 Rs.260 60 Tot otal al asse assets ts Rs.47 s.470 0 Rs.4 Rs.442 42 Tot otal al liab liab.. and and ow own. equi equity ty Rs.4 Rs.470 70 Rs. s.44 442 2
December 31 market December market price per per share: Rs.120 Rs.106 Find a. current ratio; b. debt-equity ratio; c. inventory turnover ratio; d. Net profit ratio; e. gross profit ratio. 14. Given the following information information for Kings Company, prepare the operatin operating g activities section on the statement of cash flows using the direct method as of December 31, 20X5.
ARM QUESTION BANK Sales
Rs.891,000
Net income
829,000 Rs.62,000
Less expenses: Cost ost of good oods sol sold d Rs.662, 62,000 000 Depreci Dep reciati ation on expense 16,000 16,000 Amortization Amorti zation expense expense 3,000 Wage expense 91,000 Rent Re nt expe expens nsee 4,00 4,000 0 Loss oss on sale sale of fi fixe xed d asse assett 2, 2,00 000 0 Interest expense 13,000 In Inco come me tax tax exp expen ense se 38 38,0 ,000 00
Increases (decreases) in selected accounts are indicated below: Cash Rs.2,800 Accounts payable Accounts receivable 9,200 Wages payable Inventory (5,900) T Taaxes payable 1,100
Rs.2,400 (700)
Prepaid rent (300) 15. Brown Industries Industries has budgeted sales of Rs.49,500 Rs.49,500 with the following budgeted budgeted costs: Direct materials Rs.15,000 Direct labor 5,000 Factory overhead: Variable 6,000 Fixed 7,000 Selling and administrative expenses: Variable 4,500 Fixed 6,000 Compute the operating income under marginal costing method if Sales is Rs.55,000.
16. Use the following data to prepare a flexible flexible budget for possible sales/pr sales/production oduction levels of 5,000, 5,500, and 6,000 units. Make sure to show the contribution margin at each activity level. Sales price Rs.12.00per unit Variable costs: Manufacturing Rs.6.00 per unit Administrative Rs.1.50 per unit Sellin Selling g Rs..50 Rs..50 per unit Fixed costs: Manufacturing Rs.15,000 Administrative Rs.5,000 17. The following following information was taken taken from the records of the Hulk Company for the year ended December 31, 2013:
Selling expenseSales s: 16,360 Indirec Indi rectt manufac manufacturi turing ng costs costs 23,440 23,440
Rs.114,000
ARM QUESTION BANK Direct materials used 37,520 General and administrati administrative ve expenses 22,800 Direct labor 26,600 There was no beginning finished goods inventory. Ending finished goods inventory was Rs.20,000. Prepare an income statement for the year ended December 31, 2013 using absorption costing method. 18. Dodger Company Company produces produces two two products, products, X and Y. The following following information information is presented for both products: p roducts: X Y Selling Sel ling price price per unit Rs.46 Rs.46 Rs.36 Rs.36 Variabl Var iablee cost per unit Rs.38 Rs.38 Rs.24 Rs.24 Total fixed costs are Rs.234,000. Dodger Company plans to sell 21,000 units of product X and 7,000 units of product Y. Compute: a. Contr Contribu ibuti tion on margin margin for for each each produc productt b. Current net income c. Break-even Break-even point in units units of both both X and Y if the sales sales mix is 3 units units of X for every every unit of Y d. Break-even Break-even volume in total dollars dollars if the the sales mix is 2 units units of X for every 3 units of Y
Roll No: Write the Alphabet of your choice answer for each question in the space provided in the Main Answer Book (Do not attach this this question paper along with the Main Answer Answer Book)
OCT/NOV 2014 08O81 FINANCIAL AND MANAGERIAL ACCOUNTING
GROUP III III
1. Debe Debent ntur ures es are: are:
Marks: 10 x 1 = 10
ARM QUESTION BANK a. b. c. d.
short-t short-term erm liabili liabilities ties arisin arising g from income income transac transaction tionss debt secured by a claim against ag ainst specific assets debt secur secured ed by a general general claim claim against against total total asset assetss unea unearn rned ed reve revenu nues es
2. The cash paid to purchase equipment equipment is included included in the ____________ ____________ section section of a statement of cash flows. a. net ccaash b. financing c. investing d. operating
3. ________ ____________ ________ ________ ________ ________ ____ is the best definit definition ion of goodw goodwill ill.. a. Actions taken by companies companies that are for the best interest of society society but have a detrimental effect on the company's short-run financial results b. The charitable contributions, contrib utions, in both time and money, wh which ich a corporation contr contributes ibutes to society as a whole c. The value value of a company's company's reputation reputation for such things things as service, quality, and product product reliability d. The excess excess of the the cost of an acquired acquired company over the sum of the fair fair market market value of its identifiable individual assets less the liabilities
4. a. b. c. d.
Consolidated Consolidated statements statements combine two or more ___________ ___________ in in a single single presentation presentation.. ac acco coun unti ting ng pe peri riod odss financial statements lega legall en enti titi ties es accounts
5. a. b. c. d.
Prepari Preparing ng the mast master er budget budget begins begins by estab establish lishing: ing: a targ target eted ed bal balan ance ce she sheet et a targeted income statement the the exp expec ecte ted d cas cash h the the expe expect cted ed sale saless
6. Limi Limited ted lia liabi bilit lity y means means that that:: a. the creditors creditors of the corporation corporation have claims claims on only the the assets of the corporation corporation and not the assets of the owners of the corporation b. the creditors of a corporation cor poration can receive only o nly up to, and no more than, the amou amount nt due to them c. the company company is required required to pay only current current liabilities liabilities in the current year and has no obligation to pay long-term liabilities in the current year d. corporations corporations can have have liabilitie liabilitiess up to only only a certain certain amount amount due due to limits limits on the company's borrowing capability
ARM QUESTION BANK
7. a. b. c. d.
The primar primary y users of manage managemen mentt accountin accounting g informati information on are: Bankers governmental regulatory regula tory authorities inter internal nal decisi decision on maker makerss suppliers
8. The level level of sales sales at which revenues revenues equal expenses expenses and and net income income is zero is called the: a. marg margin in of safe safety ty b. contribution margin c. brea breakk-ev even en po poin intt d. marg margin inal al inc incom omee poin pointt
9. Depre Deprecia ciati tion on is use used d to: to: a. establis establish h the current current marke markett value value of an asset asset b. allocate the original cost of an asset to particular periods or products c. accum accumul ulate ate fund fundss to repl replace ace an an asset asset d. Al Alll of thes thesee answe answers rs are are correc correct. t.
10. A budget that is often changed changed at the end of a reporting peri period od is called: a. a bal balan ance ced d bud budge gett b. a cost budget c. a fle flexi xibl blee bud budge gett d. a tria triall bala balanc ncee budg budget et Management Accounng Instrucons to candidates: Answer any 5 quesons in Part A Answer any three quesons in Part B Part C is compulsory. Part D is to be answered in the Queson Paper itself during the last half an hour of the examinaon
Part A (5 x 6 = 30 Marks) 1. The William William Wallace Wallace Company Company has gathere gathered d the following following informa informaon on for the year year ended ended December 31, 20X0: Sales $67,000 Direct materials used 12,900 Direct labor 5,200
ARM QUESTION BANK Fixed: Factory overhead Selling expenses Administrave expenses Variable: Factory overhead Selling expenses Administrave expenses There were no beginning beginning or ending inventories. Absorpon Cosng and Marginal Cosng approach.
2.
6,400 5,300 3,700 3,300 9,700 2,300 Calculate Operang Income u using sing
Leerman Leerman Compan Companyy has gathered gathered the the followi following ng informao informaon: n: March March 31 ending ending cash cash balanc balance e $80,000 $80,000 Deprec Dep reciao iaon n expen expense se for for April April $12,000 $12,000 Dividen Divi dends ds paid paid iin n Apri Aprill $55,000 $55,000 Cash collecons collecons in April $510,000 $510,000 Equi Equipm pmen entt pur purcha chase se for cash cash in Apri Aprill $94,5 $94,500 00 Cash pai aid d for operang expenses in April $185, 185,5 500 Merc Me rcha hand ndis ise e pa paid id for in Apri Aprill $180, $180,000 000
Leerman Company requires a minimum cash balance of $80,000. Prepare a cash budget budget for April, and comment on whether or not minimum cash balance requirements are met.
Answer: Cash Budget: April Beginning cash balance Cash collecons Total cash available
$590,000
Cash disbursements: Merchandise purchases$180,000 Operang expenses 185,500 Equipment purchase 94,500 Divide Dividends nds paid paid 55,000 55,000 515,000 515,000 Ending cash balance
$80,000 510,000
$75,000
Minimum cash balance requirements have not been met. Leerman Company will need to borrow $5,000 to meet their maximum cash requirements.
3. Bulger Corporation has been producing producing and selling 40,000 h hats ats a year. The Bulger
Corporation has the capacity to produce 50,000 hats with its p present resent facilities. The following information is also available:
ARM QUESTION BANK Selling price per unit Variable costs per unit: Manufacturing Selling and Administrative Fixed costs in total: Manufacturing Selling and Administrative
$30 11 5 $128,000 56,000
If a special order is accepted for 10,000 hats at a price of $25 per unit, What would be its net income?
4. What are the the businesse businessess that are likely likely to use use job cosng cosng or process process cosng cosng systems? systems? Give Give relevant examples for both. 5. Retread Retread Company Company manufac manufactures tures running running shoes. shoes. The selling selling price price per pair of shoes shoes (one (one unit) unit) averages $80 and variable costs per pair are $47.50. The sales volume volume of $776,000 produces $100,750 of net income before taxes. a. Compute total xed costs. b. Compute total variable costs. c. Compute the break-even point in units. d. Compute the quanty of units above breakeven to reach targeted net income before taxes. 6. Why are more more and more organiz organizaons aons in both manufac manufacturin turing g and nonmanu nonmanufactur facturing ing industries adopng acvity-based cosng systems? Part B (3 x 10 = 30 Marks)
7. The followi following ng data a are re ava availab ilable le Lakshmi Lakshmi Ele Electri ctric c for a yearl yearly y period. period. Fixed Expenses:
Rs.(lakhs)
Wages and salaries
5.5
Rent, rates and taxes
2.6
Deprecation
3.4
Sundry administrative expenses
2.5
Semi-variable Expenses (at 50% of capacity): Maintenance and repairs
1.5
Indirect labor
5.9
Sales department salaries, etc.
1.8
Sundry administrative salaries
1.8
Variable Expenses (at 50% of capacity): Materials
16.7
Labor
15.4
Other expenses
5.9
Assume that that the fixed expenses expenses remain remain constan constantt for all levels o off production: production: semi-variable semi-variable expenses expenses remain constant between 40% and 60% of capacity, increasing by 10% between 60% and 80% capacity and by 20% between 80% and 100% capacity.
ARM QUESTION BANK
Rs. (lakhs)
Sales at various levels are: 50% capacity
125
60% capacity
145
75% capacity
175
90% capacity
200
100% capacity
220
Prepare a exible budget for the year and forecast the prot at 60%, 75%, 90% and 100% capacity. 8. The income statement and comparative balance sheets for Big Valley Company are presented below. Construct a statement of cash flows using the indi indirect rect method. Big Valley Company Income Statement For the Year Ended 12/31/X6
Sales $586,000 Less expenses: Cost Cost of goo goods ds so sold ld $311, $311,000 000 D eporrecziaa Am o onn eexxppeen nssee Wage e exxpense 88,000 Rent expense 24,000 Interest expense 4,900 Income tax expense56,000 Lo Loss ss on sale sale of x xed ed asse assett Total expenses
Net Income
1 34 ,0,0 00 00
(2 (2,6 ,600) 00) (498,300)
$87,700
12/31/20X6 12/31/20X5 12/31/20X6 12/31/20X5 Current assets: Current liabilies: Cash $19,900 $16,300Accounts payable $27,700$21,100 A receivable Incvceonutnotrsy rec Prepaid rent
3 6,,3 00 0 2 00 0 48 20 57 3,,9 90 2,000 1,800 $106,400
W pa 00 0 Intaegreesstpay p paayyaabbllee 6 1,,2 1, 60 Taxes payable 6,800 $99,900
50 ,7000 4 7,900 $42,300
$35,100 Long-term assets: Long-term liabilies: Land $32,000 $22,000 Bonds payable 44,000 36,000 Fixed assets 130,000 118,000 $86,300 $71,100 Accum. depr. (46,000) (39,000) Owners' equity: Patent 12,000 11,000 Common stock $35,000 $32,000 $128,000 $112,000 Retained income 113,100 108,800
$148,100 Total liabilities and
$140,800
ARM QUESTION BANK Total assets $211,900
$234,400
$211,900
owners' equity $234,400
No land was sold in 20X6, and any land purchased purchased was acquired by issuing bonds payable. A fixed asset was sold for $4,100. 9. Bryant Corpor Corporaon aon uses uses a joint process process to produc produce e products products A, B, and C. Each Each product product may be sold at split-o or processed further and then sold. Joint processing costs for the year amounted to $100,000. Other informaon is presented below:
Sales Value Productat Split-o A B C
Separable Processing Costs aer Sales Value Spl Split-oat at Co Compleo on n
$94,000 $28,000 60,000 8, 8 ,000 82,000 66,000 14,000 80,000
$116,000
Required: a.
Whic Which h prod produc ucts ts,, if any, any, shou should ld be proc proces esse sed d fu furt rthe her? r?
b.
If all all tthr hree ee prod produc ucts ts were were proc proces esse sed d ffur urth ther er,, wha whatt wou would ld be the the e ee ect ct on
prots? Answer: a. Only Only Pro Produ duct ct B shou should ld be be pro proce cess ssed ed fur furth ther er an and d it wo woul uld d res resul ultt in an increase in prots ($82,000 - $60,000 - $8,000 = $14,000). Bryant Corporaon would be indierent as to the further producon of C because it would not add any prots to the company. Product A should not be processed further. b.
Product A: $116,000 - $94,000 - $28,000 $28,000 = $(6,000) Product B: $82,000 - $60,000 - $80,000 =
$14,000
Product C: $80,000 $80,00 0 - $66,000 $66,0 00 - $14,000 =
-0-
Net increase to prots
$8,000
ARM QUESTION BANK 10. Laguna Company operates a wine outlet in a tourist tourist area. One-gallon boles sell for $18. Daily xed costs are $4,500, and variable costs are $9 per gallon. An average of 750 gallons is sold each day. Laguna Company has a capacity capacity of 800 gallons per day. Required: a. Det Determine th the average cco os t p pe er ga gallon. b. A bus bus load loaded ed with with 40 40 seni senior or cciz izen enss stop stopss by at clo closi sing ng me me an and d the the to tour ur d dir irec ecto torr oer oerss Laguna Company $450 for 40 gallons. Laguna Company refuses refuses,, saying they would lose $3.75 $3.75 on each gallon. Is Laguna Company Company correct about the $3.75? Why or why why not? c. A fund fund-r -rai aisi sing ng org organ aniz iza aon on has has oe oere red d Lagun Laguna a Comp Compan anyy a one one-y -yea earr cont contra ract ct tto o bu buyy 300 300 gallons a day for $10.75 each. Should they accept the oer? Why or why why not?
Part C (1 x 20 = 20 Marks) 11. The following is the the balance sheet of Silver Company. Analyze it carefully and prepare a nancial report with relevant answers answers to the liquidity, solvency, stability and protability of the company. Silver Company Balance Sheet December 31, 20X6 and 20X5
Current assets: Cash Acco Ac cou unt ntss rece receiv ivab able le Supplies Inventory Prepaid aid insurance Tot Total curr curre ent asse ssets
12/31/20X6
12/31/20X5
$24,800 57,6 57,60 00 44,8 44,800 00 4,000 126,400 12, 12,800 800 $2 $225 25,,60 600 0
$17,600 4,800 104,800 16,800 $1 $18 88, 8,80 800 0
Long-term assets: Fixed assets $640,000 $568,000 Ac Accu cum mulate ated depreciaon (308, 08,800) (251,2 1,200) 00) Pa Pate tent nt 40, 40,000 000 52,0 52 ,000 00 Total Tot al long-t long-term erm assets assets $371,20 $371,200 0 $368,8 $368,800 00
Total assets $596,800 $557,600 Current liabilies: Accounts payable $47,200 $40,800 Wages payable 35,200 49,600 Interest payable 8,000 9,600 Taxes payable 31,200 20,800 Total current liabilities $121,600 $120,800 Long-term liabilies: Bonds payable 224,000 248,000 Total liabilies $345,600 $368,800 Stockholders' equity: Common stock
$128,000
$120,000
Retained Retaine d income 123,200 123,20 0 68,800 Total stockholders' equity $251,200 $188,800
ARM QUESTION BANK
Total liabilies and stockholders' equity $596,800
$557,600
Silver Company Income Statement For the Year Ended December 31, 20X6 Sales $916,800 Less: Cost of goods sold (391,200) Gross profit $525,600 Less operang expenses: Wage expense $239,200 Supply expense 20,000 Insurance expense 19,200 Depreciaon expense 57,600 Amorzaon expense 12,000 Rent expense 33,600 (381,600) Operating income $144,000 Interest expense (24,000) Income before taxes $120,000 Income tax expense (48,000) Net income $72,000
Part D (20 x 1 = 20 Marks) 12. Magic Company owns a xed asset asset with an original cost of $100,000. Magic Company esmates it will use the asset for 4 years, at which me the asset can be sold for $10,000. The book value of the asset aer two years of use is: a. $55,000 b. $50,000 c. $45,000 d. $100,000 ($100,000 - $10,000) / 4 years = $22,500 depreciaon per year; $100,000 - ($22,500 x 2) = $55,000 13. High Chaparral Company's capital stock is currently trading for $22 per share. The High Chaparral Company has the following accounts included within the owners' equity section of the balance sheet: Capital stock, $5.00 par value, 10,000 shares issued $50,000 Ca Capi pita tall in in exc exces esss of of par par valu value e 110, 110,00 000 0
Assuming that the only transaction affecting these accounts was the issue of the company's capital stock, the High Chaparral Company originally sold its capital stock for:
a. $5 $5.0 .00 0 per sha hare re b. $1 $11. 1.00 00 per per sha share re c. $16.00 per share d. $2 $22. 2.00 00 per per sha share re
ARM QUESTION BANK ($50,000 + $110,000) / 10,000 = $16 14. _______________ is the system which applies applies costs to like products that are usually mass produced in continuous fashion through through a series of production pro processes. cesses. a. Process costing b. Variable costing c. Jo Jobb-or orde derr co cost stin ing g d. JIT co costing
15. ________________ ________________ is an example example of a product that would not be manufactured using process cosng. a. Flour b. Glass c. Toothpaste d. A building 16. For next year, Iverson Iverson Company has budgeted sales of 30,000 units, units, target ending nished nished goods inventory of 1,000 units, and a beginning nished goods inven inventory tory of 800 units. All other inventories are zero. zero. __________ should be produced. a. 29,800 units b. 30,000 units c. 30,200 units d. 31, 31,800 800 un units 30,000 + 1,000 - 800 = 30,200 units 17. Florida Company expects expects a total of $10,000 in sales in May, of these, $4,000 sales are expected to be for cash. Collecons are 50% in the month of sale, 40% in the month following the sale, and 5% two months months following the sale. The remaining 5% is expected expected to be uncollecble. ___________ ___________ is the esmated cash collecon in May from May sales. a. $4,000 b. $10,000 c. $7,000 d. $5,000 $4,000 + [($10,000 - $4,000) x .50] = $7,000 18. Jerry Company planned planned to produce 12,000 units. This level level of acvies req required uired 20 set-ups at a cost of $18,000 plus $500 per set-up. Actual sales were 10,000 units, requiring 15 set-ups and 12,000 machine hours. Actual set-up cost was $26,000. __________ is the master budget variance for set-ups.
a. b. c. d.
$2,5 $2,500 00 favo favora rab ble $2,500 unfavorable $2,000 favorable $2,0 $2,000 00 unfa unfavo vora rabl blee $26,000 – [($500 x 15) + $18,000] = $500 (U) [($500 x 20) + $18,000] – [$500 x 15) + $18,000] = $2,500 (F)
$500 (U) + $2,500 (F) = $2,000 (F)
19. A variance variance is the differenc differencee between: between: a. a budget budgeted ed amou amount nt and and a bench benchmar mark k amoun amountt b. the required number of inputs inputs for the number of outputs outputs
ARM QUESTION BANK c. an actual result and a budgeted amount d. a budget budgeted ed amou amount nt and and a stand standard ard amount amount 20. Joe Smith has paid o the mortgage on his house and cconnues onnues to live in the house. house. The interest income forgone by not selling the house and invesng the proceeds is an example of a(n): a. sunk cost b. detrimental cost
c. opportunity cost d. outlay cost
21. _____________________ _____________________are are a qualitave factor of a make-or-buy make-or-buy decision. a. Variable manufacturing costs b. Avoidable costs c. Long term relaonship with suppliers d. Oppo Opport rtun unit ityy co cost stss 22. Future costs costs are relevant relevant in decision decision making when: when: a. they exceed future revenues b. they are not based on esmates c. they dier between alternaves d. they they are the the same same betwee between n altern alternav aves es 23. Which of the following is the the key queson in decision making? a. What are the xed costs of each alternave? b. What are the past costs of each alternave? c. What dierence will the choice make? d. What What are are the irr irrele elevan vantt ccost osts? s? 24. _______________ _______________ is (are) (are) the primary consideraon consideraon in choosing among among accounng system systemss and methods. a. Simplicity b. Behavioral implicaons c. The cost-benet balance d. Co Comp mput uter eriz iza aon on 25. Babbling Brook Hospital has overall variable costs costs of 75% of total revenues and xed costs of $40 million per year. There are 40,000 paent-days esmated for next year. The breakeven point expressed in total revenue is: a. $160 million b. $40 million c. $10 million d. None None o off thes these e answ answers ers is correc correct. t. $40 million / (1 - 0.75) = $160 million
26. Costs that may be essential to the long-run achievement of the organization's goals, bu butt that managers can almost reduce to zero in the short run, are called: a. en engi gine neer ered ed co cost stss b. mixed costs c. co comm mmit itte ted d fixe fixed d cost costs. s. d. discretionary fixed costs 27. Treasu Treasury ry stock stock is: a. unissu unissued ed sshar hares es of of a corpor corporaon aon’s ’s o own wn stock stock
ARM QUESTION BANK b. shares of a corporaon’s stock which have been issued and subsequently repurchased by the corporaon c. ownership ownership rights rights in other compan companies ies held held by the the corporaon corporaon for for investmen investmentt purposes purposes d. shares shares of a corpor corporaon’s aon’s stock held by the board of directors directors 28. _______________ are are investments that the company buys only with the intent to resell resell them shortly. a. Bonds b. Trading securities c. Avai Availab lablele-fo forr-sa sale le securi securiti ties es d. Options 29. Idenfy which of the following statements regarding job-order cosng is true. a. Job-order cosng deals with great masses of like units. b. Job-order cosng is an averaging process. c. In job-order cosng the measure of producon is small, whereas in process cosng the measure of producon is large. d. Job-order cosng is one of the two common systems of product cosng. 30. Bing Company reported reported sales of $180,000, an an increase in accounts receivable of $15,000, and a decrease in cash of $20,000. ____________________ ____________________ was received from Bing Company’s customers. a. $195,000 b. $165,000 c. $200,000 d. $160,000 $180,000 - $15,000 = $165,000 31. The stockholders’ equity secon of a corporaon’s balance sheet sheet can be divided into: a. b. c. d.
net income income and retain retained ed earnin earnings gs retain retained ed earni earnings ngs and and paid paid-in -in capi capital tal net in incom come, e, retai retained ned earn earning ings, s, and paid paid-in -in capit capital al pa paid id-i -in n capi capita tall and net net inc incom ome e
Financial and Managerial Accounng Group I (10 x 3 = 30 Marks) Marks) 1. 2. 3. 4. 5.
What is importance of ratio analysis Why are budgets prepared? What do you understand by liquidity of a firm? How cost accounting helps in internal decision making of a firm? As an engineer how would you use accounting information for the betterment of your organization? 6. Unit sales of Product X are currently 10,000, while unit sales of Product Y are double those of Product X. Assuming sales of Product X increase by 10% and tthose hose of Product Y go up by 4,000 units. What will be the company's sales forecast for Product X and Product Y? 11,000 and 24,000
ARM QUESTION BANK
7. Rao The The following following is is the income income stateme statement nt for Nicklaus Nicklaus Company. Company.
Sales (only credit sales) Less: Cost of goods sold Gross profit Less: Operating expenses
$1,606.0 1,062.0 $544.0 322.0
Operating $222.0 Less other income expense: expense : Interest Intere st 9.6 Income before tax $212.4 Less: Income tax expense 85.0 Net income $127.4 Find the gross profit rate for Nicklaus Company?
8. CVP Execuve Execuve Ambience Ambience Compan Companyy sells sells desks desks at $480 $480 per desk. desk. The costs costs associ associated ated with with each desk are as follows: Direct materials $195 Direct labor 126 Variable factory overhead 51 Total xed costs for the period are $456,840. Find The contribuon-margin rao.
9. Cost Doghouse Company had the following following information: At a manufacturing level of 5,000 5,000 units, variable and fixed manufacturing costs are $30 and $8 per un unit, it, respectively. Selling price is $60 per unit. What is the total manufacturing manufacturing cost for 15,000 units? FC= 8 x 5000 = 40000 VC = 30 x 15,000 = 4,50,000 Total = 4,90,000
10. Ruby Corporaon has the following sales budget for the last six months of 20X0: July $100,000 October $90,000 August 80,000 November 100,000 September 110,000 December 94,000 Historically, the cash collecon of sales has been as follows: 65% of sales collected in month of sale 25% of sales collected in month following sale 8% of sales collected in second month following sale 2% of sales are uncollecble What is the expected expected cash collecon in October. ($90,000 x .65) + ($110,000 x .25) + ($80,000 x .08) = $92,400 Group II ( 6 x 10 = 60 Marks) Answer any 6 of the following 11. P & L Acco Accoun untt Given the following year-end balances, prepare a Profit and Loss Account. Accounts payable $2,550 Ac Acccounts receivable 3,550 550 Accumulated de depreciaon 6,250 Beginning rre etained iin ncome 6,450 Cash 2,300
ARM QUESTION BANK Cost of goods sold 52,300 Depr Deprec ecia iao on n ex expe pens nse e 2,50 2,500 0 Dividends declared 8,800 Fixed as assets 29,000 Income tta ax ex expense 10,700 Interest expense 1,150 Inventory 6,250 Long-term note payable11,500 Pa Paid id-i -in n capi capita tall 4,45 4,450 0 Prepaid rre ent 350 Ren Rent ex expense 4,000 Sales 118,600 Wage Wag e exp expen ense se 31,90 31,900 0 Wages Wag es paya payable ble 3,000 3,000 Answer:
Income Statement
Sales $118,600 Less: Cost of goods sold
(52,300)
Gross profit Less operang expenses:
$66,300
Wage expe Wage expense nse $31,90 $31,900 0 De Depr prec ecia iaon on exp expen ense se 2,50 2,500 0
Rent Rent ex expe pens nse e
4, 4,000 000 (3 (38, 8,40 400) 0)
Operating income $27,900 Less other expenses: Interest Income before taxes
(1,150) $26,750
Less: Income tax expense Net income
(10,700)
$16,050
12. Balance sheet Given Given the following balances balances for Garvey Company on December December 31, 20X5, prepare a classied balance sheet. Accumulated depreciation $21,800 Accounts payable 11,200 Accounts rece ceiivable 9,800 Addional p pa aid-in ca capital 24,000 Capital stock 6,000 C Fiaxsehd as ass7e,4ts00 89,400 Interest payable 2,400
ARM QUESTION BANK Inventory 13,600 Long-term note payable28,000 Prepaid rent 2,500 Retained ea earnings 22,900 Wages Wag es p paya ayable ble 6,400 6,400 Garvey Company Balance Sheet December 31, 20X5 Current assets: Cash $7,400 Accounts receivable In Inve vent ntor ory y 13,6 13,600 00 Prepaid rent
9,800
2,500
Total current assets Long-term assets:
Fixed assets
$33,300
$89,400
Accumulate Accum ulated d depreciao depreciaon n (21,800) (21,800) Total long-term assets Total assets
67,600 $100,900
Current liabilies: Ac Acco coun unts ts payab payable le $11,2 $11,200 00 Intere teresst paya payab ble Wages payable
2, 2,40 400 0 6,400
Total current liabilities Long-term liabilies: Notes payable Total liabilities Stockholders' equity:
$20,000
28,000 $48,000
Capital stock $6,000 Addi Ad dio ona nall paid paid-in -in ca capi pita tall 24,00 24,000 0
Reta Retain ined ed earni earning ngss 22,90 22,900 0 Total stockholders' equity
52,900
Total liabilies and stockholders' equity
$100,900
13. Raos The following are the income statements statements and balance sheets for Coors Company:
ARM QUESTION BANK
20X2 Sales (only (only credit sales) sales) $1,606.0 $1,606.0 Less cost of goods sold 1,062.0 1,062.0 Gross profit $544.0 Less operating expenses322.0 Operating income $222.0 Less ess ot othe herr ex exp pen ense se:: Inte Intere rest st Income before tax $212.4 Less income tax expense Net income $127.4
20X2 20X1 20X2 Current Curre nt assets: assets: Current Current liab: liab: Cash $36 $38 Accts receivable 180 Inventory 120 100 Prepaid Pre paid rent 20 24 Total current assets $356 Long-term assets: Fixed assets $320 $316 Accum. de deprec. (206) Total long-term assets $114
Total assets
$470
$442
9.6 9.6 8 5 .0
20X1 Accts payable $98 $64 144 Wages payable 18 Taxes payable 28 4 Curr Current ent portion port ion $306 of long-term debt Total current liabilities $174 $90 (180) Long-term liabilities $136 Total liabilities $240 Owners' equity: Common stoc tock, $5 par Retained income Total ow owners’ eeq quity Total liab. and own. equity
16
30
6
66 $182
92
$80 150 $230 $470
$80 180 $260 $442
December 31 market price per sha share: $120 $106 Find a. current rao; b. debt-equity rao; c. inventory turnover rao; d. Net prot rao; e. gross prot rao.
14. Cash ow statement statement Given the following information for Kings Company, prepare the operating activities section on the statement of cash flows using the direct method as of December 31, 20X5.
Sales Less expenses:
$891,000
Cost of goods sold $662,000 De Depr prec ecia iao on n ex expe pens nse e 16,00 16,000 0 Amor Am orz za aon on expe expens nse e 3,00 3,000 0 Wage Wa ge ex expe pens nse e 91,00 91,000 0 Rent exp expe ense 4, 4,0 000 Loss on sale of xed asset 2,000 Interest e exxpense 13,000
ARM QUESTION BANK Income ta tax ex expense 38,000 829,000 Net income $62,000 Increases (decreases) in selected accounts are indicated below:
Cash $2,800 Accounts payable Ac Acco coun unts ts re rece ceiv ivab able9, le9,200 200 Wage Wagess pay payab able le (7 (700) 00) Inventory (5,900) Taxes payable 1,100 Prepaid rent (300)
$2,400
Answer: Kings Company Statement of Cash Flows
For the Year Ended December 31, 20X5
Cash ow from operang acvies:
Sales $891,000 Less: Increase in accounts rre eceiva vab ble
(9,200)
Cash received from customers Costt o Cos off g good oodss sold sold $662,00 $662,000 0
$881,800
Less: Decrease Decrease in inventory (5,900) Less: Increase Increase in in accoun accounts ts payable payable (2,400) Cash paid to suppliers Wage expense
(653,700)
$91,000
Add dd:: Dec ecrrea ease se in wage wage pa paya yabl ble e Cash paid for wages Rent expense
70 700 0 (91,700)
$4,000
Less: Decrease in prepaid rent
(300 300)
Cash paid for rent
(3,700)
Interest expense
(13,000)
Income tax expense
$38,000
Less: Increase in tax payable Cash paid for taxes
(1,100)
(36,900)
Net cash flow from operating activities
$82,800
ARM QUESTION BANK 15. Marginal cosng Brown Industries Industries has budgeted budgeted sales of $49,500 with the following budgeted costs: Direct materials $15,000 Direct labor 5,000 Factory overhead: Variable 6,000 Fixed 7,000 Selling and administrave expenses: Variable 4,500 Fixed 6,000 Compute the operang income under marginal cosng method if Sales is $55,000.
16. Flexible budget Use the following data to prepare a flexible budget for possible sales/production levels of 5,000, 5,500, 5,500, and 6,000 units. Make sure to show the contribution margin at each activity level. Sales price $12.00 per unit Variable costs: Manu Ma nufa fact ctur urin ing g $6 $6.0 .00 0 per per unit unit Admi Ad mini nist stra rativ tivee $1 $1.5 .50 0 per per unit unit Selling $.50 per unit Fixed costs: Manufacturing $15,000 Administrative $5,000
17. The following informaon was was taken from the the records of the the Hulk Company Company for the year year ended December 31, 2013: Sales $114,000 Selling expenses: 16,360 Indi Indire rect ct manu manufa fact ctur urin ing g ccos osts ts 23,4 23,440 40 Direct materials used 37,520 Ge Gene nera rall and and ad admi mini nist stra rav ve e expe expens nses es 22,80 22,800 0 Direct labor 26,600 There was no beginning nished goods inventory. Ending nished goods inventory was $20,000. Prepare an income statement statement for the year ended ended December 31, 2013 using absorpon cosng method. Answer: Hulk Company Income Statement For the Year Ended December 31, 20X0 Sales
$114,000
Cost of goods manufactured and sold: Direct materials used 37,520 Direct labor Indirect manufacturing cost
26,600
23,440
ARM QUESTION BANK Cost of goods manufactured
$87,560
Ending nished goods inventory Cost of goods sold
- 20,000 $67,560
Gross margin
$46,440
Selling expenses Genera Gen erall and adminis administra trave ve expens expenses es
- 16,360 - 22, 22,800 800
Operang income
$7,280
18. CVP Dodger Dodger Compan Companyy produ produces ces two produc products, ts, X and and Y. The fol follow lowing ing inf inform ormao aon n is presented for both products: X Y Selling price per unit $46 $36 Variable co cosst per unit $38 $24 Total xed costs are $234,000. Dodger Company plans to sell 21,000 units of product X and 7,000 units of product Y. a. b. c. d.
a.
Compute: Contri Contribu buon on marg margin in ffor or each each produc productt Cu Curr rren entt net net inco income me Break-even Break-even point in in units of both X and and Y if the the sales sales mix is 3 units units of X for for every every unit of of Y Break-even Break-even volume volume in total total dollars dollars if the the sales mix is 2 units units of X for for every 3 units of of Y Answer: X: $46 - $38 = $8 Y: $36 - $24 = $12 b.
c.
(21, (21,00 000 0 x $8 $8)) + (7 (7,0 ,000 00 x $1 $12) 2) - $23 234, 4,00 000 0 = $1 $18, 8,00 000 0
21,000:7,000 = 3:1 (3 x $8) + (1 x $12) = $36 $234,000 / $36 = 6,500 units X: 6,500 x 3 = 19,500 units Y: 6,500 x 1 = 6,500 units d.
(2 x $8) + (3 x $12) = $52 $234,000 / $52 = 4,500 units X: 4,500 x 2 = 9,000 x $46 = $414,000 Y: 4,500 x 3 = 13,500 x $36 = $486,000 Total dollar sales = $900,000
ARM QUESTION BANK Group III (10 x 1 = 10 Marks) Answer all the following. Choose the best answer:
19. a. b. c. d.
Debent Debenture uress are: short-term short-term liabilies liabilies arising arising from from income income ttransa ransacons cons debt debt secure secured d by a claim claim again against st speci specic c assets assets debt secured by a general claim against total assets unea unearn rned ed reve revenu nues es
20. The cash paid to purchase equipment is included in the ____________ section of a statement of cash flows. a. net cash b. nancing c. invesng d. operang 21. _____________________ ____________________________ _______ is the best denion denion of goodwill. a. Acons taken taken by companie companiess that are fo forr the best intere interest st of society society but have have a detriment detrimental al eect on the company's short-run nancial results b. The charitable charitable contrib contribuons, uons, in both both me and and money, money, which a corpora corporaon on contribute contributess to society as a whole c. The value value of a company company's 's reputaon reputaon for for such things things as as service, service, quality, quality, and and product product reliability d. The excess of the cost of an acquired company over the sum of the fair market value of its idenable individual assets less the liabilies 22. Consolidated statements combine two or more ___________ ___________ in a single single presentation. a. ac acco coun unti ting ng peri period odss b. financial statements c. legal entities d. accounts 23. Preparing the master budget budget begins by establishing: establishing: a. a ttar arge gete ted d bal balan ance ce shee sheett b. a targe targete ted d inco income me sta state teme ment nt c. th the e exp expe ecte cted ca cash d. the the e exp xpec ecte ted d ssal ales es 24. Limited Limited liability liability means means that: that: a. the creditor creditorss of the corpora corporaon on have have claims on on only the the assets of of the corpora corporaon on and not not the assets of the owners of the corporaon b. the creditors of a corporaon c orporaon can receive only up to, and no more than, the amount due to them c. the company is required to pay only current liabilies in the current year and has no obligaon to pay long-term liabilies in the current year d. corporaons can have liabilies up to only a certain amount due to limits on the company's borrowing capability 25. The primary users of management accounng informaon are: a. Bankers b. govern governmen mental tal rregu egulat latory ory a auth uthori ories es c. internal decision makers d. suppliers 26. The level of sales at which which revenues equal e expenses xpenses and net income income is zero is called the: a. marg margin in of sa safe fety ty
ARM QUESTION BANK b. c. d. 27. a. b. c. d. 28. a. b. c. d.
co cont ntri ribu buo on n mar margi gin n break-even point marg margin inal al inco income me po poin intt Depreciaon Depreciaon is used used to: to: establ establish ish the the curre current nt marke markett value value of an a asse ssett allocate the original cost of an asset to parcular periods or products accu accumu mulat late e funds funds to replac replace e an an asse assett All of thes these e answ answers ers are correc correct. t. A budget that is often often changed at the the end of a reporting period is called: a bal balan ance ced d bud budg get a cost budget a flexible budget a ttri rial al ba bala lanc ncee bu budg dget et
Part A (10 x 1 = 10 Marks)
R.No……………
Answer all the following quesons: 1. As the cost-driver acvity level increases within th the e relevant range: a.
total xed costs remain unchanged
b.
xed costs per unit increases
c.
total variable costs decrease
d.
variable costs p pe er un unit increases
2. As the cost driver activity level decreases within the relevant range: a.
total xed costs increase
b.
xed costs per unit decreases
c.
total variable costs decrease
d.
variable co costs pe per u un nit de decreases
3. As the level of acvity decreases within the relevant range: a.
total xed costs increase
b.
xed costs per unit decreases
c.
total variable costs increase
d.
variable co costs p pe er u un nit rre emain un unch cha anged
4. A mortgage payment would most likely be identified as a:
a.
purely variable cost
Name:………………………
ARM QUESTION BANK
5.
b.
discretionary fixed cost
c.
committed fixed cost
d.
mixed cost
A lu lump su sum am amount of of rreesearch an and de development pl planned ffo or Se Senko C Co orporation ion w wo ould most lliikely be identified as a:
a.
purely variable cost
b.
discretionary fixed cost c.
step cost
d.
mixed cost
6. ____________________ _____________________ _ is a product cost.
a. Dire Direct ct mate materi rial al co cost st b. Sel Selling cco ost c. Dis Distr trib ibu uo on n cos costt
7.
d. Ad Admi mini nist stra rav ve e cost cost _______________ _______________ is beer suited for a single physical unit or a few like units. a. The The proce process ss-c -cos osn ng g syst system em b. The The peri period od-c -cos osng ng syst system em c. The The pro produ duct ct-c -cos osn ng g ssys yste tem m d. The The job-o job-ord rder er-c -cos osn ng g sys syste tem m
8. Idenfy which of the following industries is most likely to use a job-order cosng system. system. a. chemicals b. plascs c.
prinng
d. meat p pa ack ckiing 9. _______________ is the system which applies costs to like products that are usually mass produced in continuous fashion through a series of production processes. a. Proc Proces esss co cossng ng b. Va Vari riab able le co cossng ng c. Job Job-o -ord rde er ccos osn ng g d. JIT cosng 10. ________________ ________________ is an example example of a product that would not be manufactured using process cosng. a. Flour
ARM QUESTION BANK b. Glass c.
Toothpaste
d. A building PSG INSTITUTE OF MANAGEMENT I MBA - TEST 1 TIME: 2 Hours
Max Marks: 35 Part B (3 x 5 = 15 Marks)
Answer all the following quesons: 11. Yetmar Corporaon Corporaon produces two products, Pots and Pans. The following informaon is available available for these these two products: Pots
Pans
Selling price per unit
Rs.25.00
Vari Variab able le cost cost pe perr un unit it
12.00 12.00
Total xed costs
Rs.15.00
9.00 9.00
Rs.15,000
Total producon producon capacity capacity
10,000 units
If a maximum of 7,000 units of each product can be sold, what would be the best combinaon of pots and pans. 12. Video Company manufactures two products, A and B. The following informaon
A
was gathered:
B
Selling price per unit
Rs.54.00
Vari Variab able le cost cost pe perr un unit it
39.00 39.00
Total xed costs
Rs.25,000
Rs.66.00
54.00 54.00
Video Company manufactures and sells three units of A for e every very two units of B. If the company sold 1,500 units of A, Find the operang income. 13. Liberty Corporaon has three departments. Data for the most recent year is
A
B
presented below:
C
Sa Sale less Variable expenses Fixed expenses:
Rs.40 Rs.400 0 Rs.2 Rs.200 00 Rs.8 Rs.80 0 128
52
34
ARM QUESTION BANK Unavoidable
96
52
12
Avoidable
116
104
54
a.
Comp Comput ute e th the e oper opera ang ng inco income me of the co comp mpan any. y.
b.
Comp Comput ute e the the co cont ntri ribu buo on n mar margin gin an and d ope opera ran ng g inc incom ome e of of e each ach de depa part rtme ment nt.. Part C (1 x 10 = 10 Marks)
er the following queson:
14. Sakthi Company has been producing and selling 100,000 units per year. They hav havee excess capacity. The following budget was prepared for the next year Selling price per unit
Rs.12.50
Variable cost per unit: Direct materials
Rs.5.00
Direct labor
3.00
Overhead
1.00
Selling and administrative
.2 5
Fixed costs in total: Overhead
Rs.80,000
Selling and administrative
35,000
Required: a.
Prep Prepar aree aan n inc incom omee ssta tate teme ment nt using sing th thee ccon ontr trib ibut utio ion n app appro roac ach. h.
b.
Prepare an income statement using the absorption absorption approach.
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