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VI SEM - BBM, Pre - Final - April - 2011

ELECTIVE - FINANCE
COST AND FINANCIAL ANALYSIS
Time: 3 Hours Max Marks: 90
SECTION A


1. Answer any 10 questions. Each question carries 2 marks. (2 x 10 = 20)


a) Define financial statement.
b) Closing stock is valued at cost or market price whichever is low is based upon which
convention of accounting.
c) What is trend analysis?
d) Is depreciation a source of fund?
e) What do you mean by differential cost?
f) What do you mean by material usage variance?
g) Variable cost margin is 65%, total fixed cost Rs. 7, 50,000. Calculate break even sales.
h) Sales Rs. 600000, G/P -20%, stock turnover is 3 times. Calculate average Inventory
i) State two limitations of fund flow statement.
j) What are the tools of financial analysis?
k) What do you mean by GAAP?
l) Define marginal cost.
SECTION B

Answer any 5 questions. Each question carries 5 marks. (5 x 5 = 25)

2. What are the limitations of accounting principles?
3. Differenciate fund flow statement and cash flow statement.
4. What are the elements of business forecasting?
5. State the limitations of standard cost.
6. Calculate cash from operations with the help of given information.
a. Gross profit for the year ending 31 March 2010 Rs. 80000
b. Office and selling expenses 35000
c. Dividend received 12000
d. Expenses paid include Rs. 3000 paid for the next year.
e. Opening and Closing balance of current assets and liabilities.
Opening balance closing balance
Debtors 15000 20000
Stock 18000 16000
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Creditors 11000 6000
Outstanding expenses 1500 1800
7. Mr. A furnishes the following data relating to the manufacture of a standard product during
the month of April:
Raw materials consumed Rs. 60000
Direct labour charges Rs. 36000
Machine hours worked 3600
Machine hour rate Rs. 5
Administrative overheads 20% on works cost
Selling overheads Re.1 per unit
Units produced 10000
Units sold 9000 at Rs. 20 per unit
You are required to prepare a cost sheet from the above showing cost per unit and profit.
8. Draw break even chart showing break even point and margin of safety with the help of
below information
Fixed overheads 1, 20,000
Variable overheads 2, 00,000
Direct wages 1, 50,000
Direct materials 4, 10,000,
Sales - 10, 00,000
9. Prepare comparative income statement with the help of following information.
Particulars 2009 2010
Sales 600000 750000
Cost of goods sold 400000 600000
Admin expenses 50000 50000
Selling expenses 20000 20000


SECTION C


Answer any 3 questions. Each question carries 15 marks. (15 x 3 = 45)


10. Explain accounting concepts and conventions.
11. Define cost. Explain the classification of cost.
12. From the following information calculate
Liquidity ratios, gross profit and net profit ratio, net profit to capital employed, fixed assets
turnover ratio, sales to capital employed and debtors turnover ratio
Sales: Cash 64000
Credit 6, 84,000
Cost of sales 5, 96,000
Warehouse and transport expenses-48000
Administration expenses-38000
Selling expenses-28000
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Debenture interest-4000
Share capital 1, 50,000
Reserves 60,000
Debentures 60000
Current liabilities 1, 52,000
Current assets:
Stock 1, 88,000
Debtors 164000
Cash 14000
Fixed assets (net) 80000
13. Following is the B/s of Sahara ltd as on 31-12-2009 & 2010

Liabilities
2009
Amt. Rs
2010
Amt. Rs
Assets
2009
Amt. Rs
2010
Amt. Rs
Share Capital 4,50,000 4,50,000 Fixed Assets 4,00,000 3,20,000
General Reserve 3,00,000 3,10,000 Investment 50,000 60,000
P & L A/c 56,000 68,000 Stock 2,40,000 2,10,000
Creditors 1,68,000 1,34,000 Debtors 2,10,000 4,55,000
Provision for Tax 75,000 10,000 Bank 1,49,000 1,97,000
Mortgage loan - 2,70,000
10,49,000 12,42,000 10,49,000 12,42,000


Additional information:
Investment costing Rs. 8,000 were sold during the year 2010 for Rs. 8,500.
Provision for taxation made during the year was Rs. 90,000
During the year part of the fixed assets costing Rs. 10,000 was sold for Rs. 12,000.
Dividend paid during the year amount to Rs. 40,000.
Prepare fund flow statement

14. A companys flexible budget at various levels of production reveals the following:
Output in Selling price Semi-fixed Variable cost Fixed cost
(000 units) per unit cost Rs. (in 000) Rs. (in 000) (Rs. in 000)
30 24 150 418 142
60 22 150 818 142
90 20 170 1278 142
120 18 170 1579 142
150 16 200 1778 142
180 14 200 1902 142
You are required to:
a. Prepare a schedule showing Total differential cost and increments in revenue
b. At what level should the company set its level of production?
c. Recommend the selling price to maximize the profits.

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