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09MA

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10 views

09MA

Uploaded by

masadakmal6
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Pakistan Institute of Public

Winter Exam-2022
Finance Accountants [08.Nov.2022] [02:00 – 05:15 pm]
Additional time – 15 min for Paper Reading

Management Accounting
Corporate | AGP | CGA | PG | PUBLIC Sectors
Marks-100 Subjective Duration: 3 Hours
[Instructions]
 Ensure that the question paper delivered to you is the same, in which you intend to appear.
 Read the instructions given on the title page of Answer Script.
 Start each question from fresh page.

Attempt all Questions

Q.1. Differentiate between Cost Accounting and Management Accounting. 05

Q.2. Pakistan Co. is a business which manufactures batteries and it has developed a new battery
which has a longer usage time than batteries currently available. The selling price of the battery
is forecasted to be Rs. 45. The maximum production capacity is 262,500 units. The company’s
management accountant is currently preparing an annual flexible budget and has collected the
following information so far:
Production (Units) 185,000 200,000 225,000

Rs.
Material Costs 740,000 800,000 900,000
Labour Costs 1,017,500 1,100,000 1,237,500
Fixed Costs 750,000 750,000 750,000

In addition to the above costs, the management accountant estimates that for each increment
of 50,000 units produced, one supervisor will need to be employed. A supervisor’s annual salary
is Rs. 35,000.
Required:
Assuming the budgeted figures are correct, what would the flexed total production cost be if
15
production is 80% of maximum capacity?

Q.3. Explain importance of Receivable Management? 10

Q.4. A company offers its customers 30 days credit but, at present, customers are taking an average
of 41 days credit. In order to speed up cash collection, the company is considering introducing
a 1% discount for payment within 10 days. The company finances its working capital
requirement using an overdraft at an annual cost of 9%.
Required:
Calculate the annual cost of offering the discount and evaluate whether or not the discount 20
should be offered.

Contd…..…
2

Q.5. A company is investing Rs. 42,000. The estimated net cash flows are as follows:

Years 1 2 3 4 5 6 7 8 9 10
Net Cash Flow
7,000 7,000 7,000 7,000 7,000 7,000 10,000 15,000 10,000 4,000
(Figures in Rs.)

Required:
Using 10% as the cost of capital, determine the following:
(a) Payback period 03
(b) Discounted payback period 03
(c) Net Present Value 03
(d) Internal Rate of Return 03
(e) Profitability Index 03

Q.6. Explain “Make or Buy decision”. 05

Q.7. A company has two production lines and its management accounts show the following:

Product Product
Line A Line B
Rs. (m) Rs. (m)
Revenue 28 30
Marginal Costs 12 20
Fixed Costs 10 14
Total Costs 22 34
Profit / (loss) 6 (4)

The total fixed costs of Rs. 24 m have been apportioned to each production line on the basis of
the floor space occupied by each line in the factory.

Required:

The company is concerned about the loss that is reported by Production Line B and is
considering closing down that line. Closing down either production line would save 25% of the
total fixed costs:
(a) Should the company close down Production Line B? 10
(b) What could be better presentation of the figures? 10

Q.8. Explain Competitive Pricing. 10

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