MBA June 2013- Examination Finance Specialisation (Major and Minor) Sub: Budgeting and Cost Control 1.

Define Cost. Explain the elements of cost with an example each.

2. What is Costing? Explain any four methods of costing? 3. What is Cost? Explain in brief any eight types of cost 4. Write short notes on: a. Cost center b. Cost unit c. Cost Estimation d. Cost ascertainment 5. What is Costing? Explain any four techniques of costing? 6. What is Budgetary control? Explain the objectives of Budgetory control? 7. What is Costing? Explain the objectives of costing. 8. What is Cost reduction? How is it different from cost control? 9. What is budgets? Explain the different types of budgets prepared by the business enterprises. 10. What is Marginal costing? Write any 4 merits and 4 demerits of marginal costing. 11. The following data relate to manufacturing of a standard product during the four weeks ending on 31st March 2013: Raw materials consumed Direct wages Machine-hours worked Machine hour rate Office overhead Selling Overhead Units produced Units sold at Rs 12 each Prepare a cost sheet and show the profit 40,000 12,000 1,000 hours Rs 2 per hour 20% on works cost Re 0.40 per unit 20,000 units 18,000 units

12. A factory produces a standard product. The following information is given to you from which you are required to prepare a cost sheet for the period ended 31 st July 2012 Raw Materials Opening stock Purchases Closing Stock Direct Wages Other Direct Expenses Factory Overhead Office overhead Selling and Distribution expenses Units of Finished product Rs 10,000 85,000 4,000 20,000 10,000 100% of direct labour 10% of works cost Rs 2 per unit sold

In hand at the beginning of the period Units 1,000(Value Rs 16,000) Produced during period 10,000 units In hand at the end of the period 2,000 units Also find out the selling price per unit on the basis that profit mark-up is uniformly made to yield a profit of 20% of the selling price. There was no work-in-progress either at the beginning or at the end of the period. 13. Raj Enterprises is a manufacturer of Cycles. It finds that in 2012, it costs Rs7,20,060 to manufacture 175 Cycles which is sold for Rs5,400 each. The cost was made up of: Materials Direct Wages Factory Overheads Office Overhead Total For the year 2013, it is estimated that: 2,82,000 3,24,000 48,600 65,460 7,20,060

a)Each scooter will require materials of Rs1,900 and labour of Rs1,600 b) Factory Overheads will bear the same relation to wages as the previous year. c) Office overheads percentage on factory cost will be the same as in the past. You are required to caclucuate the price to be quoted per Cycle if the company expects the same percentage of profits as earned in the year 2012.

14. What is Break Even Analysis? What are its assumptions? 15. What is Break Even Chart? Draw the break even chart showing different variables of the break even analysis. 16. What is Cost sheet? Draft a format of a cost sheet. 17. The trading results of Pradhan Limited for the two years are given below. Year 2008 2009 Compute the following: I. II. III. IV. V. Sales 5,40,000 6,00,000 Profit 12,000 30,000

PV Ratio Fixed Costs Break-even analysis Margin of safety at a profit of 48,000 Variable costs during the two years

18. The following information is supplied to: Fixed cost (Total) - 4,500 Variable Cost (Total) - 7,500 Sales (Total) - 15,000 Units Sold - 5,000 units Calculate: a) Contribution b) B.E Points in units c) Margin of Safety d) Profit e) Volume of sales to earn a profit of Rs 6,000 19. What is Zero Based Budgeting? Write any 8 features of ZBB. 20. Bangalore Engineering co ltd manufactures product X . An estimate of number of units expected to be sold in the first seven months of 2013 is given below. Months January February March April May June July It is anticipated that: Product X 500 600 800 1000 1200 1200 1000

a) There will be no work-in-progress at the end of any month: b)Finished units equal to half the anticipated sales for the next month will be in stock at the end of each month(including December 2012)The budgeted production and production costs for the year ending 31 December 2012 are as follows: Production(units) Direct materials per unit Direct Wages per unit Other manufacturing charges apportion able to each type of product You are required to prepare: Product X 11000 12 5 44000

a) A production budget showing the number of units to be manufactured each month. b) A summarized production cost budget for the 6 month period-Jan to June 2013 21. A company expects to have Rs 60,000 cash in hand on 1 April, and requires you to prepare an estimate of cash position during the three months-April, May and June.The following information is supplied to you. Month Sales Purchase Wages Factory Office Selling Expenses Expenses Expenses February 75000 45000 9000 7500 6000 4500 March 84000 48000 9750 8250 6000 4500 April 90000 52500 10500 9000 6000 5250 May 120000 60000 13500 11250 6000 6570 June 135000 60000 14250 14000 7000 7000 Other information: 1. Period of credit allowed by suppliers 2 months. 2.20% of sales are for cash and period of credit allowed to customer is 1 month. 3. Delay in payment of all expenses-1 month 4. Income tax of Rs 57,500 is due to be paid on 15 June. 5. The company is to pay dividends to shareholders and bonus to workers of Rs15,000 and Rs 22,500 respectively in the month of April. 6. Plant has been ordered to be received and paid in May. It will cost Rs1,200,000. 22. The Sales and Profits for 2 years are as below: Sales Profit Year 2011 Rs. 20 lakhs Rs. 2 lakhs Year 2012 Rs.30 lakhs Rs. 4 lakhs Calculate, a) PV Ratio

b) Sales required to earn a profit of 10 lakhs. c) Margin of Safety of the year 2011 and 2012 d) Profit when sales are 50 lakhs 23. A company is expecting to have Rs.35,000 Cash in hand on 1st April 2013,and it requires you to prepare a Cash Budget for 3 months from April to June 2013. The following information is supplied to you (Amount in Rs.), Month Feb Mar Apr May Jun Sales 1,70,000 1,80,000 1,92,000 2,00,000 2,20,000 Purchases 40,000 50,000 52,000 60,000 55,000 Wages 8,000 8,000 9,000 10,000 12,000 Expenses 6,000 7,000 7,000 8,000 9,000

Other information: A. Period of credit allowed by suppliers: two months B. 25% of the sales are of cash and period of credit allowed to customers for credit sales one month. C. Delay in payment of wages and expenses: one month D. Income tax of Rs.40,000 is to be paid in June 2013.

24. From the following details available in the records of a company for the year ending 31st March 2013 Particulars Opening balance (1/4/2012) Closing balance (31/3/1013) Raw material 86000 10400 Work in progress 16000 18000 Finished goods 300 units (Rs 30000) 600 units Transaction for the period a. Purchase of raw material 320000 b. Direct labor 178000 c. Direct Expenses 66000 d. No of units produced 1000 e. Factory over head 98000 f. Office and administration over head 32000

g. Selling & distribution Rs 6 per unit sold h. Profit earned by the company 15% on selling price. You are required to prepare a cost sheet & ascertain cost of selling per unit 25. Company x a manufacturer of furniture producers of chair the costing data for the year 2012 is as follows a. b. c. d. e. f. g. h. Direct material Direct labor Direct Expenses Factory over head Office and administration over head Selling & distribution overhead No of units produced & sold Profit 220000 160000 120000 90000 40000 11000 1000 66000

In the year 2013 company got an order for 500 chairs, the following changes are expected a. Materiel prices are expected to increase by 15% b. Labor charges will increase by 10% per unit c. Direct Expenses will reduce by 5% per unit d. Selling & distribution will reduce to 3000 e. Factory over head to be recovered as a % of direct wages f. Office and administration over head to be recovered as a % of works cost g. The company wants to earn 10% of profit on cost You are required to prepare a cost sheet for the year 2012 and calculate the price to be quoted per chair 26. The following data are available relating to a product x which manufactured in batches MBQ is 2000 units a. Raw Material per unit b. Direct labor per unit c. Direct Expenses per unit d. Factory over head e. Office & administration overhead f. Insurance g. Depreciation on furniture h. Duration of the batch Prepare a batch cost sheet & calculate cost per unit 220 160 30 30000 per month 60000 per month 24000 per annum 36000 pa 15 days

27.a. What is Marginal Costing? Write any four areas of its managerial application. b. Following details are available in the records of a company relating to product X this product requires a product Y for its assembling, it is available in the market @ Rs. 32 per unit with an assured supply

The cost of making the product is as follows a. Material 19 per unit b. Labor 7 per unit c. Other variable expenses 5 per unit d. Fixed expenses 2 per unit Suggest whether the product to be manufactured or purchased

28. A company produces & sells 3 different products AB&C the details are given below Particulars A B C Selling price per unit (Rs) 500 400 300 Direct material per unit(Rs) 190 260 240 Direct labor per unit(Rs.) 60 30 20 Direct expenses per unit(Rs.) 30 40 10 Variable over head per unit(Rs.) 20 10 Total fixed cost of the firm is Rs. 80000. You are required to suggest the most profitable sales mix from the following combinations of products. 800 units of only A 500 units of A B& C 700 units of A B each & 900 units of c 29. The following particulars are available in a company relating to co x Particulars A B C Selling price (Rs) 280 260 180 Variable cost (Rs) 120 140 110 Direct material required per unit 5 kg 4 kg 3kg Total demand (in Units) 100 200 300 Total raw material available 1800 kgs Total fixed cost 20000 You are required to suggest a profitable sales mix 30. The following details of a manufacturing company A B & C are the products and details given below Particulars A B C Selling price (Rs) 280 190 380 Variable cost (Rs) 140 100 180 Direct labor required per unit( in hrs) 20 10 6 Demand in units 400 500 300 Total labor hours available 12000 hrs Total fixed cost is 45000 You are required to suggest the most profitable sales mix