Model Test Paper 2013 B.Com.

-III
EAFM-II Business Budgeting
Very short answer type questions. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Define Budgetary Control. What is Key Budget Factor? Explain the meaning of 'Cash Inflows? What do you mean by 'Key Factor? Give the formula to calculate After-Tax Cost of redeemable debentures. What is the difference between Risk and Uncertainty? Explain the objectives of cash budget. What do you mean by Economic order quantity? Give the formula to calculate After-Tax Cost of redeemable preference shares. Define Business Forecasting.

Short Answer type questions. 1. 2 3. 4 Explain the meaning of 'Cash Inflows'? What is importance of flexible budget? Name the methods of segregation of semi-variable costs into fixed and variable costs? What is the difference between Production Budget and Production Cost Budget?

Long answer type questions. 1. The Standard Metal Co. Ltd. : manufactures, a single product. The standard of which is as follows: Material X 60% at Rs. 20 Material Y 40% at Rs. 10 Normal loss in production is 20% of input. Due to shortage of material X, the standard mix was charged. Actual results for March, 1996 were as follows:Material X 210 kgs. atRs. 20 = 4,200 Material Y 190 kgs. atRs. 9 = 1,710 Input 400 kgs. Rs. 5,910 Loss 70 kgs. Output 330 kgs. Calculate Material Variances.
On the basis of the following information, state which project should be accepted? Year 0 1 2 3 Cash Flows Project X Project Y (Rs.) (Rs.) -20000 -20000 8000 10000 8000 12000 4000 6000

2.

Riskless discount rate is 10%. Project X is less risky as compared to project Y. The management considers risk premium rates at 2% and 5% respectively appropriate for discounting the cash inflows.

3. 4.

What do you understand by standard costing? Production Costs of Suresh Industries for a year are as follows: Direct Labour Cost Direct Material Cost Production Overheads Fixed Variable Rs. 75,000 Rs. 1,20,000 Rs. 45,000 Rs. 70,000

Rs. 1,15,000

The production manager anticipates the followings in the forthcoming year: (a) The average rate of direct labour will fall from Rs. 4 per hour to Rs. 3 per hour, (b) Production efficiency will decrease by 4% (c) Direct labour hours will increase by 10% and (d) The purchase price per unit of direct materials and of other materials and services included in overheads will remain unchanged. Draw up a production cost budget and compute a factory overheads rate, the overheads being absorbed on direct wages basis.

5-

The following are the budgeted expenses of Kiran Industries at the 60% (60,000 units). Prepare a Flexible budget for 70% and 90% capacity levels: Costs (i) Direct Material (ii) Direct Wages (iii) Other Expenses (Direct) Prime Cost (A) Variable Overheads : (i) Consumable Materials (ii) Shop Labour (iii) Maintenance and Repairs Total Variable Overheads (B) Fixed Overheads : (i) Inspection (ii) Depreciation (iii) Insurance (iv) Salaries

activity level Rs. 1,20,000 3,00,000 60,000 4,80,000

15,000 6,000 8,000 29,0000

6.

1,600 10,000 5,000 6,000 Total Fixed Overheads (C) 22,600 Total Cost (A+B+C) 5,31,000 Profit 68,400 Sales 6,00,000 The following details are available from the record of a manufacturing concern regarding budget figures for 2009 : (a) Budgeted sales 1,000 units @ Rs. 100 per unit. (b) Budgeted production cost : Materials Rs. 40,000; Labour Cost Rs. 15,000 and Factory overheads Rs. 5,000. (c) Budgeted Administrative overheads Rs. 12,000. (d) Budgeted selling overheads Rs. 8,000. (e) Appropriations : Taxes Rs. 10,000; Dividend Rs. 7,000 and Transfer To Reserves Rs. 3,000. Prepare the master Budget for the year, 2009.

7.

From the following particulars calculate various Labour Variances: Standard (Nos.) Weekly Wages (Nos.) Per Worker (Rs.) Men 75 60 70 Women 45 40 30 Boys 60 30 80

Actual Weekly Wages Per Worker (Rs.) 70 50 20

The job was scheduled to be completed in 30 weeks but actually it was completed in 32 weeks. 8. What do you mean by cost of capital? How it is beneficial for financial management.