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Consolidated - Test Set ABC

The document is a practice test for a Managerial Accounting course, covering various topics such as cost classification, profit volume ratio, break-even analysis, and cost implications for business decisions. It includes multiple sets of questions that require calculations and explanations related to direct and indirect costs, budgeting, and pricing strategies. The test aims to assess students' understanding of key managerial accounting concepts and their application in real-world scenarios.

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arunkumarvr20122000
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6 views

Consolidated - Test Set ABC

The document is a practice test for a Managerial Accounting course, covering various topics such as cost classification, profit volume ratio, break-even analysis, and cost implications for business decisions. It includes multiple sets of questions that require calculations and explanations related to direct and indirect costs, budgeting, and pricing strategies. The test aims to assess students' understanding of key managerial accounting concepts and their application in real-world scenarios.

Uploaded by

arunkumarvr20122000
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Managerial Accounting: Sec A Term II: PGDM 2022-24

Practice Test: 20 Marks - SET A+B+C


Date:18/11/22
1. Direct costs and controllable costs are not necessarily the same.
2. Explain the classification of cost based on Activity & Controllability. Give examples in each case.
3. Explain the cost of Profit Volume Ratio with a business example
4. With the help of a scenario explain any the following: - Budgeted cost & Historical Cost.
5. What are cost that avail an exception in the cost sheet. How does this impact the profits of the company?

6. You have been approached by a friend who is seeking your advice as do whether he should give up his shop
as an engineer, with a current salary of rupees 14800 per month and go into business on his own assembling
and selling a component which he has invented. He can procure the parts required to manufacture the
component from a supplier. It is very difficult to forecast the sales potential of the component, but after
some research, your friend has estimated the sales as follows:
(i) Between 600 to 900 per month at the selling price of rupees 250 per component.
(ii) Between 901 to 1250 components per month at a selling price of rupees 220 PER component for the entire lot.
The Costs of the parts required would be rupees 140 for each completed component. However, If more than 1000
components are produced in each month, a discount of 5% would be received from the supplier of parts on all
purchases. Assembly costs would be rupees 60000 per month up to 750 components. Beyond this level of activity
assembly costs would increase to 70000 per month.
Your friend has already spent rupees 30000 on development, which he would write-off over the first 5 years of
the venture.
Required:
(i) calculate for each of the possible sales level at which your friend could expect to benefit by going into the
venture on his own.
(ii) calculate the break even point of the venture for each of the selling price
(iii) Advice your friend has to the viability of the venture.

SET 2

7. Explain the classification of cost based on Nature & Traceability. Give examples in each case.
8. With the help of a scenario explain any the following: - Notional Cost & Abnormal Cost
9. Explain the cost of BreakEven with a business example
10. HTM Ltd. By using 12,00,000 units of a material M produces jointly 2,00,000 units of H and 4,00,000 units of
T. The costs and sales details are as under:
Direct Materials M @ ₹5 per unit 60,00,000
Other Variable costs 42,00,000
Total Fixed Costs 18,00,000
Selling price of H per unit 25
Selling price of T per unit 20
The company receives an additional order for 40000 units of T @ Rupees 15 per unit. If this order has been
accepted, the existing price of T will not be affected. However, the present price of H should be reduced
evenly on the entire sale of H to market the additional units to be produced.
Required:
Find the minimum average unit price to be charged on H to sustain the increased sales.

Set 3

11. Explain the classification of cost based on Element & Function. Give examples in each case.
12. Direct costs and controllable costs are not necessarily the same.
13. With the help of a scenario explain any the following: - Opportunity Cost & Imputed Cost
14. Explain the cost of Margin of Safety with a business example
Managerial Accounting: Sec A Term II: PGDM 2022-24
Practice Test: 20 Marks - SET A+B+C
Date:18/11/22
15. P Q R Limited, a manufacturer of toolkits has just completed XY's domestic order of100 kits at a
price of rupees 1650 per kit. The details of cost for XY'sorder are:
COST
Direct Material 90,000
Direct Labour 32,000
Tools and Consumables 16,400
Variable Overheads 9,600
Fixed Overheads 15,000
Total 1,63,000
The company wishes to evaluate a special export order from Expo Limited of similar 300 kits at rupees 1600
per kit. For the export order, special packing has to be done at rupees 20 per kit. An additional fixed
inspection cost specific to this export order has to be incurred. The allocation of fixed overheads will be
revised to increase by rupees 25000. Tools and consumables above include special purpose tools costing
rupees 10000 incurred for XY's order and these can be reused for the export order and the remaining portion
is variable. PQR limited wishes to accept the export order at 10% profit on the selling price.
Required: (i) what should be the maximum amount that can be incurred as inspection cost for making such
an acceptance possible?
(ii) If Expo Limited offers to take the products without inspection, what is the maximum discount (as a
percentage of the existing export price) that PQR Limited can offer to retain its 10% profit on the revised
selling price? ( Round off calculations to two decimal places)

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