Course Code : MCO – 05
Course Titl e : Accounti ng of Manageri al Decisi ons
Assi gnment Code : MCO– 05/TMA/2013-14
Coverage : Al l Bl ocks
Maxi mum Marks: 100

Attempt al l the questions
1. “Fi xed costs are real l y vari abl e. The more you produce the l ess they
become”. Comment the statement. (20)
http://www.accounti ng-basi cs-for-students.com/-cost-accounti ng-fi xed-vs-
vari abl e-.html

2. “Funds Fl ow Statements al so suffers from wi ndow dressi ng of accounts
and hence fai l s to gi ve true vi ew of funds movement.” Do you agree
wi th thi s cri ti ci sm? Gi ve your vi ews. (20)

3. Wri te short notes on the fol l owi ng: (5+5+5+5)

(i ) Budget Commi ttee
(i i ) Budget Key Factor
(i i i ) Master Budget
(i v) Overhead Budget

4. Di fferenti ate between the fol l owi ng: (20)

(i ) Responsi bi l i ty Accounti ng and Conventi onal Cost Accounti ng
(i i ) Standard Costi ng and Budgetary Control

5. From the books of Aggarwal Bors, the fol l owi ng i nformati on have been
extracted: (20)

Rs. Sal es 2,40,000
Vari abl e costs 1,44,000
Fi xed costs 26,000
Profi t before
Rate of tax 40%
The fi rm i s proposi ng to buy a new pl ant whi ch can generate addi ti onal
annual profi t of Rs. 10,000. The fi xed costs of new pl ant i s expected to Rs.
4000. The new pl ant wi l l i ncrease the sal es vol ume by Rs. 40,000. It can be
assumed that the rati o between sal es and vari abl e costs remai ns the same.
Cal cul ate.

(i ) New BEP
(i i ) Sal es to earn present l evel of profi t
(i i i ) Sal es to earn expected profi t on proposed i nvestment
(i v) Maxi mum profi t potenti al after tax and pl ant expansi on