MS-04

Management Programme

ASSIGNMENT
SECOND SEMESTER
2018

MS-04: Accounting and Finance for Managers

School of Management Studies

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 ASSIGNMENT
Course Code : MS-04
Course Title : Accounting and Finance for Managers
Assignment Code : MS-04/TMA/SEM-II/2018
Coverage : All Blocks
Note: Attempt all the questions and submit this assignment on or before 31st October, 2018 to
the coordinator of your study centre.
1. As a Finance Manager what are the kind of decisions that you have to make about your
company and its activities ? How do these decisions differ form those which investors,
regulatory agencies and others make about your company? Is the same kind of
information needed by You and the outsiders of the company? If so what is that
information ? If not, what are the essential differences?

2. You are required to prepare the Statement of Sources and Application of Funds from the
given Financial Statements of ABC Limited for the years 2016 & 2017. Also prepare the
Statement showing in details the item-wise increase or decrease in the Net Working
Capital.

31.12.2017 31.12.2016
Rs. Rs.
Assets
Cash at Bank 45,000 1,30,000
Sundry Debtors 1,40,000 90,700
Stock-in-Trade 1,96,000 1,42,000
Fixed Assets less Depreciation 6,00,000 3,60,000
Investments 10,000 11,250
Prepaid Expenses 21,000 14,000

Rs. 10,12,000 7,48,450

Liabilities

Sundry Creditors 2,98,000 2,51,450

Provision for Taxation 1,72,000 65,000
Secured Loan from Bank - 87,000
Reserves and Surplus 3,12,000 1,48,000
Share Capital:
Ordinary Shares of Rs. 100 each 2,30,000 1,97,000
Rs. 10,12,000 7,48,450
 Further it is informed that:

The position in respect of Reserves and Surplus is :

Rs.
Balance as on 1st January, 2017 1,48,000
Net profit for the year 1,98,500

3,46,500
Less: Dividend 34,500
3,12,000

(i) On 31st December 2017 the accumulated depreciation on fixed assets was Rs.
1,80,000 and on 31st December 2016 Rs 1,60,000. Machinery costing Rs. 20,000
which was one-half depreciated was discarded and written off in 2017. Depreciation
for the year 2017 amounted to Rs. 30,000

(ii) Investments costing Rs. 5,000 were sold during the year 2017 for Rs. 4,800 and
Government Securities of the face value of Rs. 4,000 were purchased during the
year for Rs. 3,750

3. The data related to Company X, Company Y and Company Z is as given below.

Company X Company Y Company Z

Budgeted sales in units 10,000 10,000 10,000

Budgeted selling price per unit Rs. 2.00 Rs. 2.00 Rs. 2.00
Budgeted variable costs per unit Rs. 1.50 Rs. 1.25 Rs. 1.00
Budgeted fixed expenses
Total Rs. 3,000 Rs. 5,500 Rs. 8,000
Budgeted capacity 80% 80% 80%

From the information given above you are required to calculate for each company :
(a) The budgeted profit.
(b) The budgeted break-even point in unit sales.
(c) The budgeted margin between break-even point and budgeted sales expressed
as a percentage of total capacity.
(d) The impact on profits of a ± 10% deviation in budgeted sales.

Comment briefly on the effect of this in relation to the distribution between the
companies’ fixed and variable expenses.

4. (a) Describe the characteristics of a flexible budget ?

(b) “For private sector” budgets are important in profit planning, but budget are costly
for not-for-profit organization” Respond.

5. Discuss your Role as a Finance Manager of your company. What will be the alternatives
and factors that you would consider before finalizing your views on dividend policy?