MANAGEMENT INFORMATION

Time allowed - 2 hours

Full Marks ‐ 100
[N.B. – The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account
of the quality of language and of the way in which the answers are presented. Different parts, if any, of the same
question must be answered in one place in order of sequence.]
Marks
1. (a) Define the following with examples: 2x2=4
(i) Cost object.
(ii) Prime cost.
(b) XYZ Ltd. has the following information about the inventory of electronic components for October 2017:
Date Quantity Cost per item (Tk.)
Beginning inventory 150 32
5 October - Purchase 200 32
17 October - Purchase 450 31
28 October - Purchase 100 33
At the end of October, 220 components remained in inventory.
If XYZ Ltd. uses the FIFO method of allocating inventory, what would be the cost of goods sold for
October? 6
2. Super Bike Manufacturing Company presents the following data for year 2017:
Sales: 8,000 Units
Production: 10,000 Units
Closing inventory: 2,000 Units
Direct materials: Tk.240
Direct labor: Tk.280
Variable manufacturing overhead expenses: Tk.100
Variable selling and administrative expenses: Tk.40
Fixed manufacturing overhead expenses: Tk.1200,000
Fixed selling and administrative expenses: Tk.800,000
Compute the unit product cost of one bike under:
(a) absorption costing systems 5
(b) marginal costing systems 5
3. Sharder Company a producer of electronic devises prepared the following absorption-costing income
statement for the year ended May 31, 2017.
Sales (16,000 units) Tk.320,000
Cost of goods sold 216,000
Gross margin Tk.104,000
Selling and administrative expenses 46,000
Operating income Tk 58,000
Additional information are as follows:
Selling and administrative expenses include Tk.1.50 of variable cost per unit sold. There was no
beginning inventory, and 17,500 units were produced. Variable manufacturing costs were Tk.11 per
unit. Actual fixed costs were equal to budgeted fixed costs.
Required: Prepare a variable-costing income statement for the same period. 5
4. All businesses face a trade off between profitability and liquidity – briefly explain. 5
5. A retail company’s working capital consists of inventory, trade receivables, cash and trade payables.
All working capital balances were the same at the beginning and end of the year. The sales revenue
for the year was Tk.900,000.
The financial ratios for the year include the following:
Current ratio 3.4:1
Rate of inventory turnover 15 times p.a.
Receivables collection period 73.0 days
Payables payment period 36.5 days
Gross profit margin 20.0%
Calculate the opening and closing cash balance. 10
Page 1 of 2
6. A retailing company is preparing its annual budget. It plans to make a profit of 25% on the cost of
sales. Inventories will be maintained at the end of each month at 30% of the following month’s sales
requirement.
Details of budgeted sales are as follows:
Credit sales – gross Cash sales
(Tk.) (Tk.)
December 190,000 40,000
January 150,000 25,000
February 170,000 35,000
March 160,000 30,000
Calculate:
a. Budgeted inventory levels at the end of December. 5
b. Budgeted inventory purchases for January. 5
7. Define the following with examples: 4x2=8
i. Cost centres.
ii. Revenue centres.
iii. Profit centres.
iv. Investment centres.
8. On the last day of the financial year, an investment centre has net assets with a total carrying amount
of Tk.1.2 million, with a return on investment of 15%.
The manager of this division is considering selling one of its non-current assets immediately prior to the year-
end. The non-current asset has a carrying amount of Tk.105,000 and a net realizable value of Tk.80,000.
What would be the division’s Return on Investment immediately after the sale of the assets at the end
of the year? 8
9. A company manufactures a single product and has drawn up the following flexed budget for the year:
Activity level
50% 60% 70%
(Tk.) (Tk.) (Tk.)
Variable materials 200,000 240,000 280,000
Variable labour 150,000 180,000 210,000
Production overhead 100,000 108,000 116,000
Other overhead 80,000 80,000 80,000
Total cost 530,000 608,000 686,000
What would be the total cost in a budget that is flexed at the level of 67% activity? 9
10. What is limiting factor? Define a situation when an organization gives a part of work to the
subcontractor. 3+4
11. Michele Limited makes two products, A & B. Product A sells for Tk.50 per unit and product B for
Tk.70 per unit. The variable cost per unit of the A is Tk. 35 and for B is Tk.40. Each unit of A uses 2
kgs of raw material and B uses 3 kgs.
In the forthcoming period the availability of raw material is limited to 2,000 kgs. The company contracted
to supply 500 units of A. Maximum demand for the B is 250 units and the demand for A is unlimited.
Calculate the profit-maximizing product mix. 10
12. A company is to spend Tk.60,000 on a machine that will have an economic life of ten years and no
residual value. Depreciation is to be charged using the straight-line method. Estimated operating cash
flows are:
Year Tk.
1 -2,000
2 +13,000
3 +20,000
4-6 +25,000 each year
7-10 +30,000 each year
Calculate the average accounting rate of return. 8

Page 2 of 2