MB0041-FINANCIAL AND MANAGEMENT ACCOUNTING

DRIVE	SPRING 2014
PROGRAM	MBADS/ MBAFLEX/ MBAHCSN3/ MBAN2/ PGDBAN2
SEMESTER	1
SUBJECT CODE & NAME	MB0041 & FINANCIAL AND MANAGEMENT ACCOUNTING
BK ID	B1624
CREDIT & MARKS	4 Credits, 60 marks

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ASSIGNMENT

1. Accounting is an art of recording, classifying and summarizing in a significant manner and in terms of money transactions and events. Explain the accounting process and write the objectives of accounting.

Answer:- Explanation of accounting process

1. Identifying the transactions and events – This is the first step in the accounting process. It recognises the transactions of financial character that are essential to be recorded in the books of accounts. When moneygoods, or services are transferred from one person or account to another person or account, it is known as a transaction.

2. Measuring – This means expressing the value

2 Journal is a book of original entry and only one journal is maintained if the business is very small in size and the transactions are limited. Give the meaning of a subsidiary book. List and explain all the types of subsidiary books.

Answer:- Explanation of subsidiary books

Each subsidiary book is meant for recording transactions of a particular type. Typically, the subsidiary books are maintained for transactions that occur most repeatedly and are most voluminous. For example, sales, purchases, and cash transactions.

The following seven types of subsidiary books are popular.

3. For the following balances extracted from a trial balance, prepare a trading account.

Particulars	Amount ( inRs.)
Stock on 1-1-2004	70700
Returns inwards	3000
Returns outwards	3000
Purchases	10200
Debtors	56000
Creditors	45000
Carriage inwards	5000
Carriage outwards	4000
Import duty on materials received from abroad	6000
Clearing charges	7000
Rent of business shop	12000
Royalty paid to extract materials	10000
Fire insurance on stock	2000
Wages paid to workers	8000
Office salaries	10000
Cash discount	1000
Gas, electricity, and water	4000
Sales	250000

Solution :-

Dr Trading Account For the Year Ending - - - Cr Particulars	Rs.	Particulars	Rs.
To stock on 1-1-2004		70700

4 Write short notes on :

a)      Cost Management System(CMS)

The explosion in technology coupled with increasing worldwide competition, is forcing managers to produce high quality goods and services in order to provide outstanding customer service and at the lowest possible cost.

b) Value added

Instead of selling a piece of wood as it is, think of converting it into a chair and then selling it. Which one would fetch more money to you? Obviously, it is the chair. By converting the piece of wood into a chair you have added value to it. You have increased the realisable value of the wood. This is called the ‘Value Added’. The value added can

5 Ajay industries manufacture a product X. On 1st January, 2007, there were 5000 units of finished product in stock.

Work-in-progress Rs.57,400

Raw materials Rs.1,16,200

The information available from cost records for the year ended 31st December, 2007 is as follows:

Direct material	906900
Direct labour	326400
Freight on R M purchased	55700
Indirect labour	121600
Other factory overhead	317300
Stock of raw materials on 31st Dec 2007	96400
Work-in-progress on 31st Dec 2007	78200
Sales (1,50,000 units)	3000000
Indirect materials	213900

There are 15000 units of finished stock in hand on 31st December 2007. Prepare a statement of cost and profit assuming that opening stock of finished goods is to be valued at the same cost per unit as the finished stock at the end of the period.

Solution:-

Statement of Cost and Profit of Product X Particular	Rs.		Rs.
Opening Stock of Raw Materials		1,16,200

6 Assume a company is considering dropping product B from its line because accounting statement shows that product B is being sold at a loss.

Product	INCOME STATEMENT
	A	B	C	TOTAL
Sales revenue	50000	7500	12500	70000
Cost of sales:
D. material	7500	1000	1500	10000
D. labour	15000	2000	2500	19500
Indirect manufacturing cost (50% of Direct labour)	7500	1000	1250	9750
Total	30000	4000	5250	39250
Gross margin on sales	20000	3500	7250	30750
Selling and Admn	12500	4500	4000	21000
Net income	7500	(1000)	3250	9750

Additional information:

a) Factory overhead cost is made up of fixed cost of Rs. 5850 and variable cost of Rs. 3900.

b) Variable cost by products are: A – Rs. 3000, B – Rs. 400, and C – Rs. 500.

c) Fixed costs and expense will not be changed if product B is eliminated.

d) Variable selling and administrative expenses to the extent of Rs. 11000 can be traced to the product: A – Rs.7,500, B – Rs.1500, and C – Rs. 2000.

e) Fixed selling and administration expense are Rs. 10000.

A Preparation of income statement

Conclusion with interpretation

Solution:-

Product		Income Statement
A	B	C	Total

Dear students get fully solved  SMU BBA Spring 2014 assignments

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