Course: Cost and Management Accounting

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NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Cost and Management Accounting

Internal Assignment Applicable for December 2016 Examination

Assignment Marks: 30

Instructions:

·       All Questions carry equal marks.

·       All Questions are compulsory

·       All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far as possible.

·       All answers to be written individually. Discussion and group work is not advisable.

·       Students are free to refer to any books/reference material/website/internet for attempting their assignments, but are not allowed to copy the matter as it is from the source of reference.

·       Students should write the assignment in their own words. Copying of assignments from other students is not allowed.

Question. 1. The board of directors of your company asked you to prepare certain projections, reports and present certain information so that they can take decision regarding whether to continue a particular venture or not. Discuss the tools you will be using to extract and present the necessary accounting information to the management. (10 Marks)

Answer: Accounting requires time and effort investment. This is not just a task of managing things or matters, when the accounting or decision making is about business then this should be done with great care and attention. There are several tools that can be used to maximize the efficiency level of the accountancy work but in this case, the board of directors asked you to prepare certain projections, reports and present certain information so that they can take decision regarding whether to continue a particular venture or not so

Question. 2. M Ltd introduces 5000 units in a process at a cost of Rs 20000. The wages and overhead incurred are Rs 12000 and Rs 15000 respectively. In normal course 10 % of the units introduced are defective. Actual output of goods is 4400 units. The rectification cost of defective units is Rs 5 per unit.

Calculate

The cost per unit

Value of abnormal loss

Process Account

(10 Marks)

Answer:

Cost per unit      = (Cost – Abnormal loss) / Output units

= (20000+12000+15000-5*100) / 4400

                             = 46500 / 4400

                             = 10.57 Rs

Value of abnormal loss = 100 units * 5 Rs per

Question. 3. a) It is very necessary for an organization to analyses the cost drivers in order to control cost and to maximize overall value. You are the cost accountant in Cipla Ltd, suggest the major components for analysis, so that the company can lower its costs and also create strategic competitive advantages. (5 Marks)

Answer: If any organize want to control the cost and maximize overall value of the company then the analysis of cost drivers. Being on the position of cost accountant in Cipla Ltd, you would need to understand and implement major components for analysis so that Cipla Ltd can be successful in achieving cost reduction goals and this will also be able to create strategic competitive advantages.

Approaches to control costs in Cipla Ltd:

1) Annual Renegotiation of all contracts: American

b) As this is the season of festivals employees of Mumbai Rayon fashion ltd are getting the overtime premium because they are working beyond the working hours in order to meet the market demand. You are the cost accountant of the company, the management wants to discuss with you the effects of overtime on productivity and how the same will be treated in cost accounting. Discuss at least five points. (5 Marks)

Answer: Festive season always brings so many holidays which is news of excitement for employees but in this case, Mumbai Rayon fashion ltd needs some employees to work extra so that company’s goals can be achieved. Company has some goals that can be fulfilled only by employee overtime. Employee will be paid overtime premium but there will be some effects of the overtime procedure because all the company follows some norms for employee’s work timeline.

You are at the position of cost accountant

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