BBA 402

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BBA402

Spring 2017

1. What are the advantages and limitations of Budgetary control?

Advantages of Budgetary Control

Limitations of Budgetary Control

Answer: Some advantages of budgetary control are:

Ø  Maximisation of profit – Budgetary control increases a company’s profits by proper planning and co-ordination of different functions. It also helps to achieve a control over capital and

Q2. Explain the method to prepare a Fund Flow Statement. Give an example of Fund Flow Statement.

Method of preparing Fund Flow Statement

Example of a Fund Flow Statement

Answer:

The following is the procedure for preparing fund flow statement as depicted in Table.

1.                  Determine the increase or decrease in working capital by preparing a statement of changes in

3. The standard material cost of producing each unit of product K is as follows :

4.8 kg of material @ Rs. 5 per kg.

Actual material cost of producing 200 units of product K is as follows:

1,200 kg of material costing Rs. 4,800.

Compute :

(i) Material Cost Variance

(ii) Material Price Variance

(iii) Material Usage Variance

From the above particulars, compute :

(i) Material Cost Variance

(ii) Material Price Variance

(iii) Material Usage Variance

Answer: Computation of:

Materials          Standard cost                                Total                   Actual cost                      Total

Units    price (Rs.)                                        Units    Price (Rs.)

K                             960        5                             4800                     1200     4                             4800

Material Cost Variance

Material cost variance = Standard cost of materials – Actual cost of materials used

4 From the following information prepare a Balance Sheet. Show the working.

(a) Working Capital Rs. 75,000, (b) Reserves and Surplus Rs. 1,00,000, (c) bank Overdraft Rs. 60,000, (d) Current Ratio 1.75, (e)Liquid Ratio 1.15, (f) Fixed Assets to Proprietor’s funds 0.75, (g) Long term Liabilities Nil

From the above particulars, prepare the Balance Sheet. Show workings

Answer:

Liabilities	Amount	Assets	Amount
Proprietors funds Reserves and surplus Bank overdraft Current liabilities	y-75000 100000   60000   40000	Fixed assets Current assets Stock	y 115000   60000
	175000+y		175000+y

Q5. What is Transfer Pricing? Explain Transfer pricing options.

Answer: Transfer pricing is an important area of management accounting. Many departments are involved in the production of a product in a manufacturing company. When the products are sold, the company earns revenue and adds it to profits. If each department is considered separately as a profit centre, we have to assign a price for the movement of goods between departments. This helps us in

Q6. If : S.P (p.u.) Rs. 100, V.C. (p.u.) Rs. 50,

Total Fixed Cost : Rs. 1, 00, 000

Find : i) BEP

ii) P/V Ratio

iii) Sales required to earn profit of Rs. 50,000

iv) New BEP if S.P. is reduced by 15 % due to competition.

Answer: contribution = s.p – v.c

= 100-50

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