Seat No: _____________ Enrollment No: _____________________

PARUL UNIVERSITY
FACULTY OF MANAGEMENT
MBA, Summer 2015-16 Examination
Semester: 2 Date: 23/05/2016
Subject Code: 06200151 Time: 2:00 pm to 5:00 pm
Subject Name: Cost and Management Accounting Total Marks: 60

Instructions:
1. Attempt all questions from each section.
2. Figures to the right indicate full marks.
3. Make suitable assumptions wherever necessary.
4. Write separate sections on separate answer sheets.

SECTION-A
Q.1 (a) (1) Which of the following is correct for Cost Accounting? (1)
A. Inventory is valued at market price
B. Inventory is valued at market price or cost price, whichever is less
C. Inventory is valued at cost price
D. Inventory is valued at market price or cost price, whichever is higher
(2) Which of the following is a method of material issued for consumption? (1)
A. Slack time remaining
B. Economic Order Quantity
C. Last In First Out
D. Reorder point
(3) Which of the following is the correct classification of labor costs? (1)
A. Direct and Indirect
B. Manager and Worker
C. Senior and Subordinate
D. None of the above
Q.1 (b) (1) Define Time Rate system of remuneration. (1)
(2) What do you mean by opportunity cost? (1)
(3) Explain Abnormal cost. (1)
Q.2 Differentiate between Bin Card and Stores Ledger. (8)
Q.3 (a) Give the advantages and disadvantages of piece-rate system. (4)
Q.3 (b) Explain the classification of the costs on the basis of Controllability. (3)

OR

Q.3 (a) State the advantages and disadvantages of Halsey Plan. (4)
Q.3 (b) Discuss about the principles of costing. (3)
Q.4 Bright Light Ltd manufactures two products- Bright and Delight, using the same (9)
equipment and similar processes. The following information is extracted from the
production department pertaining to the two products for the quarter ending 31
December 2015:
Particulars Bright Delight
Quantity produced (units) 10,000 15,000
Direct labor-hours per unit 2 4
Machine-hours per unit 3 1
Number of set-ups in the period 20 80
Number of orders handled in the period 30 120
Total production overheads recovered for the period has been analyzed as follows:
Particulars Rs.
Relating to machine activity 4,50,000
Relating to production run set-ups 40,000
Relating to handling of orders 90,000
5,80,000
 You are required to calculate the production overheads to be absorbed by each unit of
the products using ABC approach. ( Use suitable cost drivers to trace overheads to
products)

SECTION-B

Q.1 (a) (1) Which of the following is not a feature of batch costing? (1)
A. Costs are collected batch-wise
B. Products are of identical nature
C. Convenient Group
D. None of the above
(2)Which of the following industry is not applicable to batch costing. (1)
A. Shoe making
B. Readymade garments
C. FMCG
D. Oil Refining
(3) Which of the following is a basic equation of marginal costing? (1)
A. Profit - Fixed cost = Sales + Variable cost
B. Profit + Fixed cost = Sales - Variable cost
C. Profit + Fixed cost = Sales + Variable cost
D. Profit - Fixed cost = Sales - Variable cost
Q.1 (b) (1) Define Process Costing. (1)
(2) What is a budget? (1)
(3) What is a key factor? (1)
Q.2 From the following data of Ajit Ltd, prepare the income statement under marginal (8)
costing.

Opening stock 5,000 units

Marginal cost Rs. 30,000
Total cost Rs. 36,000
Units produced 30,000 units
Units sold 33,000 units
Closing stock 2,000 units
Variable cost Rs. 1,77,000
Factory overheads Rs. 35,100
(fixed)
Selling cost
Variable Rs. 1,70,000
Fixed Rs. 25,000
Selling price per unit Rs. 20

Q.3 (a) Which are the limitations of budgeting? (4)

Q.3 (b) Differentiate between cost control and cost reduction. (3)

OR

Q.3 (a) Explain the concept of Responsibility Accounting. (4)

Q.3 (b) Differentiate between Fixed and Flexible Budgets. (3)
Q.4 From the following data relating to two different vehicles, A & B, computer the cost per (9)
tone-mile.
A B
Mileage run (annual) 15,000 6,000
Tonnes per mile (average) 6 4
(Rs) (Rs)
Cost of vehicle 25,000 15,000
Road license (annual) 750 750
Insurance (annual) 700 400
Garage rent 800 700
Supervision and salaries (annual) 2,500 2,500
Driver’s wages per hour 3 3
Cost of petrol per gallon 3 3
Miles per gallon 20 miles 15 miles
Repairs and maintenance charges (Rs./ mile) 1.65 2.00
Tyre allocation per mile 0.40 0.60
Estimated life of the vehicle (miles) 1,00,000 75,000
You are required to charge interest on cost of vehicle at 5% per annum. The vehicle
runs 20 miles per hour on an average.