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FM11

Financial and Management Accounting


Assignment No.I

Assignment Code: 2013FM11A1 Last Date of Submission: 15th April 2013


Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A
Ques.1 Discuss in brief the various GAAPs that are mandatory to be followed.
Ques.2 What are the various components of total cost.
Ques.3 What are the statements of financial information? Discuss two items from each.
Ques.4 Explain statement of changes in financial positions, with an example.

Section-B
Case Study

M/s XYZ Ltd manufactures a product PLVS at its plant at Meerut, the maximum capacity of
which is 200 units per month. Details of raw materials which go into the making of 1 units of
PLVS are provided to you below:-
Sl.No Raw material description Standard Qty per Standard purchase
finished unit (No) price per unit (Rs. 00)
1 A 1 6
2. B 2 5
3. C 3 4
4. D 4 3
5. E 5 2
6. F 6 1

Standard fixed overheads are Rs. 20,00,000/- per month whereas the standard variable
overhead rate has been estimated as equal to Rs.1,400/- per unit of finished good.

You are required to compute the


a) Standard cost of the product.
b) Compute the production volume variance in case the company produces and sells only
100 units of finished goods in the concerned month.
c) Compute the usage and material price variances considering the following actual data
(actual production and sale: 100 units)

Raw material Actual quantity Actual price (Rs.00)


description consumed (Nos)
A 102 7
Page No. 1 of 4
B 201 6
C 310 5
D 415 4
E 540 3
F 610 2

d) Assuming no deviation in the actual selling price (Rs. 30,000/-) and the actual overheads
from what was projected in Standards, you are required to compute actual profits.

FM11
Financial and Management Accounting
Page No. 2 of 4
Assignment No.II

Assignment Code: 2013FM11A2 Last Date of Submission: 15th May 2013


Maximum Marks:100

Attempt all the questions. All the questions are compulsory and carry equal marks.

Section-A
Ques.1 Write short notes on
- P V Ratio
- Margin of Safety
- Material Variances
- Absorption Costing

Ques.2 Explain the meaning of the term `variance analysis. What is its significance in
controlling and monitoring costs?
Ques.3 a. What are the pre-requisites of installation of responsibility accounting system?
b. Distinguish between cost centre and profit centre.
Ques.4 (a) Distinguish between standard costing and budgetary control.
(b) Calculation of variances in standard costing is not an end in itself, but a means
to an end Discuss.

Section-B
Case Study

Ramesh developed original specification of a product and founded Ramesh Manufacturing Ltd.
In 2007 the firm manufactured 980 nos at an average price of Rs.900/- each. In 2008 due to
continuous price rise of the inputs, he raised his prices at an average of 12%, since he knew he
could sell plants full capacity of 980 nos per year. In spite of price rise for the product, which
sold for over Rs.1000/- for the first time. Ramesh was surprised to learn in late 2008 (as may be
seen from the financial statements) that Ramesh Manufacturing Ltd show a decline in earnings
and still worse, decline in cash flow.
His accountant has bought the following:
i) We are following FIFO system for the purpose of issues.
ii) Costs are going up faster than 12% and they will go up further in 2009.
iii) We are not setting aside enough to replace the machinery; we need to set aside
Rs.1,65,000/- not Rs.1,50,000/- so as to be able to buy new machinery.
iv) It is still not late to switch to LIFO for 2008. This will reduce closing inventory to
Rs.3,30,000/- and raise cost of goods sold

Ramesh Manufacturing Ltd

Income statement
(Rs.000)

Page No. 3 of 4
2008 2007
Sales 1,008 900
Cost of goods sold
Opening 320 250
inventory
Raw material 500 400
Labour 200 174
Depreciation 150 150
End inventory (-) (-) 320
390
780 654
Gross margin 228 246
Administrative 100 92
expenses
EBIT 128 154
Interest 50 50
78 104
Income tax 39 52
Profit after tax 39 52
Add: non cash 150 150
expenses
Inventory charge (-) 70 (-) 70
Cash flow 119 132

Required:
a) What is the weighted average inflation factor for the firm using LIFO?
b) If the firm desires a 15 percent profit margin on sales, how much should the firm
charge for the product per unit?

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