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Q.1) Major differences between financial and management accounting in various dimensions are: S.No. Features 1. 2. 3. 4. 5. Principles Time Unit expression Nature Specificity Financial Management Accounting Accounting Double entry Cost benefit analysis system Historical data Current and future data of Money only Any statistical unit Actual data Aggregates Projected data Detailed analysis

Q.2 Marginal cost=Rs 24,000

Sales=Rs 60,000

Contribution=Sales-Marginal cost = 60,000-24,000 = Rs 36,000 P/V Ratio= Contribution*100/Sales = 36,000*100/60,000 = 60%

Q.3) Calculation of Contribution and MCSR Sales= 10,000*80= 8,00,000 And, Variable Cost= 10,000*40= 4,00,000 Contribution= Sales-Variable cost

= 8,00,000-4,00,000 = 4,00,000 MCSR= 4,00,000*100/8,00,000 = 50%

Q.4) Five limitations of marginal costing: The income-tax authorities do not recognize the marginal cost for inventory valuation. The main assumption of marginal costing is that variable cost per unit will be same at any level of activity. This is only partly true within a limited range of activity. The Marginal costing approach may result in setting prices which do not allow for the full recovery of overhead. It does not provide any standard for the evaluation of performance. Selling price fixed on the basis of marginal cost will be useful only for short period of time.

Q.5) Cash Collection: Collection Cash sales From debtors: January February March April May April 37,500 8,400 18,750 63,000 May 27,500 10,500 26,250 67,500 June 25,000 14,700 28,125 49,500





Q.6) Steps in budgetary control

There are certain steps, which are necessary for the successful implementation of budgetary control system:

Organization: The proper organization is essential for preparation, maintenance and administration of budgets. A budgetary committee is formed, which comprises of the departmental heads of various departments. Budget Center: This part of the organization may be a department, section of a department or another part of the department. Actually budget is being prepared only for this part of the organization. Budget manual: It is a document, which spells out the duties and also responsibilities of various executives concerned with the budget. It specifies relation amongst various functionaries. Budget committee: In small-scale concerns the accountant is made responsible for the preparation and implementation of the budget. In large-scale concerns a committee known as budget committee is formed. The members of this committee are the heads of all departments of an organization. It is responsible for preparation and execution of budget.