Management Accounting — Winter 2024

Differentiate between Financial Accounting Vs. Management Accounting.

Pass the Journal Entires in the books of M/s. Sun Ltd. • 01/03/2021 Issued Equity share capital of Rs.10,00,000. • 03/03/2021 Bought office equipment worth Rs.4,00,000, amount paid by cheque. • 05/03/2021 Purchased goods on credit of Rs.1,00,000. • 08/03/2021 Sold goods of Rs.15,00,000 and amount received through RTGS. • 09/03/2021 Paid Salary of Rs.3,50,000 through bank transfer. • 11/03/2021 Returned the goods of Rs.65,000 to Mr. A. • 15/03/2021 Electricity Bill of Rs.2,00,000 received, but the amount yet to be paid.

Marginal Costing rewards sales and Absorption Costing rewards production. Comment.

Consider a small retail store Fast Communications that sells only one type of smartphones. The purchase price and the sales price are mentioned in ‘000 (thousands). The store has an opening inventory of 50 smartphones, costing Rs.10 each. During the month, the store makes the following transactions: 1. 1st March: Purchased 100 smartphones at Rs. 12 each 2. 10th March: Sold 80 smartphones at Rs.15 each. 3. 15th March: Purchased 50 smartphones at Rs.17 each. 4. 19th March: Sold 90 smartphones at Rs.20 each. 5. 25th March: Purchased 70 smartphones at Rs.22 each. 6. 30th March: Sold 100 smartphones at Rs.25 each. Calculate the value of ending inventory, if any, using FIFO Method, and also compute the profit.

Write a short note on IFRS.

Thaper Oil and Fats limited purchased furniture on 1st January, 2011 for the office amounting to Rs.12,500. The company wanted to charge depreciation at 10% p.a. Prepare furniture Page 1 of account for three years when depreciation is charged on original cost method and if it is charged on reducing balance method. Consider calendar year i.e. December end as the year end for the company. Round-off the decimal values if any. Which method is best suitable if the objective of the company is to pay less tax? Which method is best suitable if the objective of the company is to show higher value of the assets? Comment in the light of the computation made.

Accounting is a science. Explain the statement in the light of the Accounting Concepts.

Pee Co. manufactures two types of pens Pand Q. The cost date for the year ended 30 September 2010 is as follows: Direct materials ₹4,00,000 Direct wages ₹2,24,000 Production overheads ₹96,000 Total ₹7,20,000 It is further ascertained that:

Direct materials in type Pcost twice as much direct material in type Q.

Direct wages for type Qwere 60% of those for type P.

Production overhead cost was same for both types.

Administration overheads for each were 200 of direct labour.

Selling costs were 50 paise per pen sold for both types

Production during the year: Type P ₹40,000 Type Q ₹1,20,000

M Ltd has planned its level of production at 50% of his plant capacity of 30,000 units. At 50% of the capacity his expenses are as follows: Particulars Rs. Direct material 8,280 Direct labour 11,160 Variable manufacturing expenses 3,960 Fixed manufacturing expenses 6,000 The home selling price is ₹2 per unit. Now the company has received a trade enquiry from overseas for 6,000 units at a price of ₹1.45 per unit. If you were the manager of the company, would you accept or reject the offer. Support your answer with suitable cost & profit details. Page 3 of

Acompany budget for a production of 1,50,000 units. The variable cost per unit is ₹14 and the Fixed cost is ₹2 per unit. The company fixes its selling price to fetch a profit of 15% on cost.

What is the break-even point?

What is the profit-volume ratio?

If it reduces its selling price by 5%, how does the revised selling price affect the break- even point and the profit volume ratio?

If a profit increase of 10% is desired more than the budget, what should be the sales at the reduced prices? Page 4 of