HOME ASSIGNMENT

Subject: Cost and Management Accounting

Class: BBA III

Maximum Marks: 70

Note:

• All the questions of section A & B are compulsory.

• Attempt any 3 questions out of 5 from Section C.

Section A – Objective Type (5Marks)

Q1. Fill in the blanks:

a) ________________________ means and includes the principles, conventions, techniques

and systems which are employed in a business to plan and control the utilization of its
resources.

b) A ______________ may be defined as a sub-division of an organization in which

financial performance is measured on the basis of profit.

c) The __________________ shows the rate at which profits are being earned once break-
even point has been reached.

d) Receipt of production order is the signal for the cost accountant to prepare
________________ on which he will record the cost of materials used and labour and
machine time taken.

e) A _________________ is one which is designed to change in relation to the level of

activity attained.

f) A ____________ is an expired cost resulting from the decline in the service potential of
an asset that generated no benefit to the firm.

g) _____________ consists of a location or an item of equipment or group of these.

 h) The ________________ is the term used for planned and positive approach to the
improvement of efficiency.

i) The contributions of various products or departments are pooled together and such a total
of contribution from all products is called ______________.

j) ___________________ is a criterion cost which may be used as a yardstick to measure

the efficiency with which actual cost has been incurred.

Section B- Short Answer Type (5*4=20 Marks)

Q2. A manufacturing concern furnishes the following information:

Sales (1,00,000 Rs.

units) 1,00,000

Variable cost Rs. 40000

Fixed cost Rs. 50000

a) Find out P/V Ratio, Break Even Point and Margin of Safety
b) Evaluate the effects of the following on P/V ratio, Break Even Point and Margin
of Safety.
i) 20 % increase in physical sales volume
ii) 10 % increase in fixed cost

Q3. Explain in brief P/V Ratio & Margin of safety.

Q4. Give the classification of cost on the basis of decision-making.
Q5. Give the meaning and applications of standard costing. What do mean by variance
analysis? Discuss.
 Section C – Application Based (15*3= 45Marks)

Q6. What do you mean by Break-even Analysis and Break-even chart? Discuss the practical
applications of C-V-P analysis.

Q7. What is the difference between job order costing and process costing? Discuss the concept
of losses and gains in process costing.

Q8. What are the characteristics of an ideal costing system and what steps you will take for
installation of costing system?

Q9. Give the structure of cost sheet under absorption costing and marginal costing. Comment on
profit and profitability.

Q10. TATA Tea Ltd tea of Darjeeling had always sold its products through a sole selling
agency. The government started devising schemes to eliminate middlemen and TATA Tea Ltd
wanted to respond to the new public policy towards private distribution.

This year, TATA Tea Ltd had made a net profit before tax (NPBT) of 10 percent on sale of Rs
20 lakhs. It is feared that elimination of the sole selling agency and selling directly to retailers
would result in a 40 percent drop in sales next year. Fixed expenses would increase from the
present figure of Rs 2.0 lakhs to 3.0 lakhs owing to the additional
warehousing, distribution, and other marketing efforts.

Elimination of middlemen would, of course, save TATA Tea Ltd a substantial chunk of
variable costs. They were not willing to give the details of the sole selling agency agreement
and how much variable cost they would eliminate by the switch-over. Instead, they wanted
advice on the following:

1. How much the variable costs need to be reduced next year in order to
make the same NPBT (not in terms of percentage, but in absolute
amount), under the new scheme as they made this year.
2. If they are likely to make a NPBT of Rs 1.8 lakhs next year under the new arrangement, what
do you think is happening to their break- even? Would they have a larger or smaller “margin of
safety,” and by how much?