Model Multiple College

First Term Examination

Cost and Management Accounting
B.B.S. 2nd Year
Group A
Brief answer question
Attempt all questions (10 x 2 = 20)
1. Explain any two objectives of cost accounting.
2. State the reasons of holding inventory.
3. Write any two differences between direct labour cost and indirect labour cost.
4. What is margin of safety?
5. Define allocation of overhead
6. The difference in total cost is Rs. 10000 and the difference in production is 2000 units. The
total cost at 15000 units is Rs.1000000. Find out variable cost per unit and fixed cost.
7. A company buys 50000 units of material annually in five installments. Each unit cost is Rs.
250 and ordering cost is Rs. 2000. The inventory carrying cost is estimated at 10% of unit
cost. Find out total cost at this inventory policy.
8. A worker under Halsey plan earned a bonus of Rs.125. He took total of 40 hours to complete
his task. The wage rate per hour is Rs. 50. Find out time saved by the worker.
9. The break- even point of a company is Rs.500000, fixed cost is Rs.100000 and variable cost
per unit is Rs. 20 per unit. Find out selling price per unit.
10. A company is working at its normal capacity of 50000 units. Annual fixed cost is Rs. 650000
and cost per unit is Rs.50. Find out total cost at 70% of the normal capacity.
Group B
Descriptive answer question
Attempt any five questions (5 X 10 = 50)
11. A) You are provided the following information:
Annual demand 90000 units
Cost per unit Rs.10
Ordering cost Rs. 50
Carrying cost 10% of inventory value
 Normal lead time 15 days
Safety stock one month’s consumption
Required: a) How much should be ordered each time?
b) When should the order be placed?
c) Before the order received, what should be the inventory level?
B) The standard job card in a factory contains the following particulars.
Standard product per hour 0.5 unit
Working hour per day 8 hours
Wages rate per hour Rs 30
Actual output per day
Sibu 3 units
Sneh 5 units
Required : Wages payable to workers based on Taylor’s differential piece rate system and
Gantt’s task bonus scheme.
12.) Sunlight Company and Ltd has three production X,Y and Z and two service departments A
and B. The following estimated figures for a certain period have been made available.
Rent and rates Rs 12000
Indirect wages Rs 5000
Depreciation on machinery Rs 6000
Other expenses Rs 2000
Lighting and electricity Rs 4800
Power Rs 3000
Following further details are also available :

X Y Z A B
Floor space 1000 1500 2000 1000 500
(sq . meter)
Light points 20 30 15 10 5
(no)
Direct wages 80000 60000 100000 10000
Horse power 400 300 500 100 200
of machine
Cost of 200000 100000 200000 50000 50000
 machinery
Working 5000 10000 5000
hours(LH)
The expenses of the service department A and B are to be allocated as follows :
X Y Z
A 30% 25% 45%
B 50% 30% 20%
Required : Overhead absorption rate per hour in respect of the three production departments .

13.) Thai Food Product Company produces namely A and B. The data for the period are as
follows
Product A Product B
Labour cost per unit RS 25 RS 30
Direct material cost per unit Rs 20 Rs 10
Production in unit 5000 10000
Labour hours per unit 2 4
Machine hours per unit 2 1
No of production runs 10 15
No of order 5 10
The cost of activities and related cost drivers are as follows
Cost pools Amount Cost drivers
Indirect labour 12500 Labour hours
Repair and maintenance 10000 Machine hours
Production related expenses 5000 No of production runs
Order related costs 15000 No of order
Required : a.) Cost per unit under conventional costing
b.) Cost per unit under ABC
14.) Shree Ganesh Construction company bid a contract for Rs. 2500000 and started the work
on 1 Baishakh 2071. The following details were provided by the company at the end of chaitra
2071;
Materials issued from store Rs 412500
Materials purchased 137600
Wages and salaries paid 381900
Other expenses incurred 109000
Plant purchase for contract 350000
Work certified was Rs 1500000 at the end of 2071. Uncertified work was estimated at Rs 41000
Material costing of Rs 10000 were lost and Rs 7000 was return to store. The company is to be
charged depreciation on plant @12% per annum. At the end of Ashadh materials valued Rs
13000 were in hand at site. Cash received is 80% of work certified.
Required : Contract account
15.) You are given the following data:
Budgeted output 50000 units
Fixed expenses Rs. 200000
Variable cost per unit Rs.10
Selling price per unit Rs.15
Required: a) Break even point in units and in Rs.
b) Required sales to earn profit Rs. 50000
c) Contribution margin at sales Rs. 600000
d) Required sales in Rs. to earn profit per unit Rs.5
e) Margin of safety ratio
16.) Define overhead and explain in brief about the accounting procedure for distribution of
overhead.
Group C
Analytical answer question
Attempt any two questions (2 X15 =30)
17.) “Break even analysis is a useful device of profit planning.” Discuss this statement with
suitable example and applications of CVP analysis.
18.) A manufacturing company provided the following information:
Jan. Feb. March April May
Sales units 10000 12000 15000 20000 25000
Each unit of output required 4 Kg of material at Rs 5 per kg. The ending inventory of finished
goods and raw material will be equal to following month’s sale need and production need. Direct
wages is Rs.10 per unit and other production overheads are 200% of wages.
Required: a) Production budget for first 3 months
b) Raw material purchase budget for first 3 months
c) Cost of goods sold budget for first 3 months.
19. Following information is given to you:
Material 2kg per unit @ Rs. 5 per kg
Labour 3 hour per unit @ Rs. 3 per hour
Variable manufacturing overhead @ Rs.6 per unit
Fixed manufacturing overhead Rs. 100000
Variable office and selling overhead Rs. 5 per unit
Fixed office and selling overhead Rs.50000
Normal output 20000 units
Opening stock 1000 units
Production 21000 units
Sales 20000 units @ Rs. 125 per unit
Required: a) Income statement under variable costing
b) Income statement under absorption costing
c) Reconciliation statement
d) Give the reason for the differences in profit
 Model Multiple College
Full mark 100 First Term Examination
Pass mark 35 Financial Accounting and Analysis
Time: 3 hours B.B.S. 1st Year
Group A
Brief answer question
Attempt all questions (10X2=20)
1.) What do you mean by financial accounting?
2.) Define money measurement concept.
3.) Explain the different bases of accounting.
4.) Give the concept of contingent liabilities.
5.) State the types of long lived assets.
6.) Ram started business with capital of Rs.500000 and assets of Rs.1200000. The liability of the
business doubles during the year. What is the liability of the business at the end of the year?
7.) ABC Company purchased a machine for Rs. 100000. The estimated life of the machine is 5
years. Its scrap value will be Rs. 3125 at the end of 5 th year. Find out rate of depreciation under
diminishing balance method.
8.) On July 1, 2018 XYZ Company borrowed Rs. 50000 from the Prime Bank by issuing a 12
month notes. The bank discounted the note at 8%. Prepare adjustment entry needed at 31 st
December 2018 to accrued interest.
9.) From the following particulars, calculate the net value added:
Remuneration and allowances 40000
Interest on debenture 6000
Income tax 17000
Dividend paid 35000
Office expenses 170000
Retained earning 19500
10.) A firm has sales during the year of Rs. 1500000, 80% on cash and remaining on credit sales
in 2018. Prepare journal entry to recognize bad debt assuming bad debt expenses is 3% of credit
sales.
 Group B
Descriptive answer questions
Attempt any five questions (5X10=50)
11.) How can we analyze the management of long lived assets? Explain in terms of different
ratios.
12.) ABC company provided the following information
Quick ratio 1.25:1
Working capital Rs.150000
Current ratio 1.75:1
Share issue expenses written off Rs.20000
Total debt Rs.425000
Long term debt to equity 0.36:1
Gross profit ratio 25%
Total assets turnover ratio 2 times
Required: a) Current liabilities b) Closing stock c) Fixed assets
d) Fixed assets turnover ratio e) Inventory turnover ratio
13.) During the year 2018, a company made total sales Rs. 3125000 of which 60% are on credit.
The company collected its receivable during 2018 Rs. 1500000. The company follows the
allowance method to estimate bad debts. The beginning balance of account receivable was Rs.
200000 and the credit balance of allowance for doubtful debt was Rs. 15000. During the year the
company write off bad debts Rs.30000.
Required:
a) Journal entries to recognize bad debts assuming that bad debt expenses is 5% of net
credit sales.
b.) Journal entries to recognize bad debts assuming that bad debt expenses is 10% of year
end account receivable.
c.) Prepare partial balance sheet at the year end of December 31, 2018 to show net
realizable value under above both assumptions.
14.) You are given the following information relating to beginning inventory and purchases of
AB Training Company. It has followed periodic inventory system to determine its inventory.
Unit Unit cost
Beginning inventory 2000 Rs 100
Purchases :
February 10 1000 90
March 12 1500 80
November 10 500 70
December 15 1200 60
During the year AB Training Company has sold 5000 units at Rs 150 each . All expenses except
cost of goods sold and taxes amounted to Rs 121000. The tax rate is 30%.
Required :
a] Compute the cost of goods sold and ending inventory value under each of the following two
methods.
i] FIFO
ii] LIFO
b] Prepare income statement under each of the methods .

15.) On 1 January 2005, X Ltd purchased a machine for Rs 110000 and spent Rs 6000 on its
installation. The excepted life of machine is 4 years after which it is expected to have salvage
value of Rs 16000. The company decided to invest the depreciation amount to earn interest at 5%
per annum Re 0.2320 invested at 5% per annum will give Re 1 at the end of 4 years as per
sinking fund table. At the end of 4 th year the investment were sold Rs 70000.
Required
a] Depreciation fund account
b] Depreciation fund investment account
c] Machinery account

16.) Muktinath Company wishes to issue 500 bonds Rs 1000 per value with a stated interest rate
of 10% on January 1 2015. Interest is paid annually on each December 31. The bonds will have a
5 year life .
Required
a] Calculate the issue price of bond if market rate is 12% and pass the journals.
b] Amortize the discount using the effective interest method.
c] Prepare the journal entry to record interest expense on December 31 2015 and the balance
sheet presentation of the bonds on that date.
Group C
Analytical answer question
Attempt any two questions (2X15=30)
17.) Why and how is trial balance prepared in the business? Explain its preparation method, use
and applications.
18.) ABC Company established to provide computer consulting services to small businesses.
The following transactions occurred during the first month of operation
 Received contributions of Rs. 200000from each of the two principal owners of business.
 Signed a two years promissory note at the bank and received cash of Rs. 150000. Interest
along with Rs. 150000 will be repaid at the end of the two years.
 Purchased office supplies of Rs. 7000 on 30 days credit term
 Billed a client Rs 40000 for services rendered by expert to client.
 Paid Rs. 13000 bill from the local newspaper for advertising for the month.
 Received 25% of the amount billed to client.
 Received cash of Rs. 28000 for services provided in assisting client.
 Paid Rs. 33000 of salaries and wages
 Paid cash Rs.14000 for utilities.
Required:
a) Analyze the effect on the accounting equation
b) Journal entries to record transactions
c) Prepare necessary ledger accounts
d) Prepare trial balance

19.) Following trial balance is extracted from the books of a company as on 31st December 2018:
Particulars Debit Rs. Particulars Credit Rs.
Cash at bank 56000 Interest on investment 26000
Purchase 100000 Debenture 200000
 Wages 40000 Sales 500000
Carriage inward 20000 Account payable 70000
Account receivable 80000 Outstanding expenses 20000
Preliminary expenses 100000 Share capital 400000
Computer and equipment 600000
Investment 120000
Other expenses 50000
Opening stock 50000
1216000 1216000
Additional information:
a) Write off preliminary expenses by 20%.
b) Reserve for bad debts to be maintained at 5% on account receivable.
c) Depreciate computer and equipment by 10%.
d) Provision made for income tax Rs.20000.
e) Stock on 31st December was valued at Rs. 80000.
Required:
a) Adjustment entries
b) Adjusted trial balance
c) Closing entries
Thank You