END TERM EXAMINATION

Management Accounting II
PGPM 2021 - 23 (TERM – II)
(Open Book Examination.)
Time – 2 ½ hrs Weight - 30%

1. Ascertain the Cost of various activities

Procurement and Dyeing and

Amount
Receiving Finishing
Office Expenses 69,700 - -
Selling Agents Commision 990,524 - -
Stationary Expenses 27,772 - -
Postage Expenses 18,194 - -
Telephone Expenses 36,525 7,305 7,305
Electric Expenses 23,171 - -
Petrol Expenses 33,662 - 13,465
Inward Freight Expenses 622,481 622,481 -
Travelling Expenses 18,786 - -
Insurance Expenses 52,177 - -
Space Rent 304,800 - -
Computer Maintainence 2,000 - -
Staff Salary 513,600 31,200 -
Depreciation 42,271 - -
Packing Materials 760,600 - -
Packing and Folding Labour Charges 397,945 - -
Contract Labour 43,095 - -
Total Cost of each activity 3,957,303 660,986 20,770

2. Determine the cost driver rates

Cost Driver
Activities Drivers Amount
Quantity
Procurement and Receiving Yards Procured 660,986 1,787,420
Dyeing and Finishing Yards Finished 20,770 2,184,600
Packaging Boxes Packed 1,647,091 1,741
Product Admin No of Products 152,485 3
Office Admin Turnover 236,634 53,355,800
Selling Expenses Turnover 1,067,589 53,355,800
Sales Support No of Customers 171,749 44

3. Find out the profitable products through a product profitability analysis

 Designer
Products Full Voile Rubia Pieces
Yards Procured 1,676,310 111,110 -
Yards Finished 2,048,800 135,800 -
Boxes Packed 1,576 97 68
No of Products 1 1 1
Turnover 49,171,200 2,851,800 1,332,800
No of Customers 40 2 2

Raw Material 33,108,608 2,194,528 1,031,451

Processing Charges 9,372,845 621,257 -
Procurement and Receiving 619,898 41,088 -
Dyeing and Finishing 19,479 1,291 -
Packaging 1,490,991 91,768 64,332
Product Admin 50,828 50,828 50,828
Office Admin 218,075 12,648 5,911
Selling Expenses 983,860 57,061 26,668
Sales Support 155,472 9,569 6,708
Total Operating Cost 46,020,055 3,080,039 1,185,898
Yards Sold 2048800 135800 23800
Cost/Yard 22.46 22.68 49.83
Yard/Box 1,300.00 1,400.00 350.00
Boxes Sold 1,576.00 97.00 68.00
Cost/Box 29200.54249779 31752.9821038914 17439.6817

Designer
Full Voile Rubia
Pieces
Price/Yard 24 21 56
Total Revenue 49,171,200 2,851,800 1,332,800
Operating Cost 46,020,055 3,080,039 1,185,898
EBIT 3,151,145 -228,239 146,902
Product Profit/Yard 1.54 -1.68 6.17
Product Profit/Box 1,999.46 -2,352.98 2,160.32
Profitability 6.41% -8.00% 11.02%

4. Arrange the customers based on their profitability

Boxes Sold
Customer Net Sales (INR)
Full Voile Boxes Rubia Boxe

SK Rajeev Kumar 2009200 60 2

Other Customers (34) 32356200 989 41
Surendra Textile 1831800 54 3
Devraj and Sons 2499400 71 5
Verma Woolen Textile 1650800 46 4
Devendra Cloth house 3058200 82 9
M/S Surender Pal 1953000 56 5
Seth Ragubir Singh 1746200 50 5
Jain Textile 2133000 58 7
Gopal Trading 2267600 62 8
Satish Kumar 1850400 48 8
Instructions:

·       Please submit your answer sheet on or before time

·       Answers not supported by workings won’t be considered for evaluation

05 Marks

Product Selling Sales

Packaging Office Admin
Admin Expenses Support
- - 69,700 - -
- - - 990,524 -
- - 27,772 - -
- - - - 18,194
- - 5,479 5,479 10,958
13,903 2,317 6,951 - -
- - - - 20,197
- - - - -
- - - 18,786 -
31,306 - 20,871 - -
182,880 76,200 45,720 - -
- 1,000 1,000 - -
192,000 62,400 52,800 52,800 122,400
25,363 10,568 6,341 - -
760,600 - - - -
397,945 - - - -
43,095 - - - -
1,647,091 152,485 236,634 1,067,589 171,749

05 Marks

Cost Driver Rate

0.37
0.01
946.06
50,828.28
0.00
0.02
3,903.38

10 Marks
 TOTAL
1,787,420
2,184,600
1,741
3
53,355,800
44

36,334,587 (Commission on RM purchased is assumed to be included in the RM value of Exhibit 2)

9,994,103
660,986
20,770
1,647,091
152,485
236,634
1,067,589
171,749
50,285,993
2,208,400

1,741

TOTAL

53,355,800
50,285,993
3,069,807

10 Marks

oxes Sold Profit

Customer
Designer Designer Profit per profitability
Full Voile B Rubia Boxes
Pieces Boxes Pieces Boxes customer

4 119,967 -4,706 8,641 123,903 6.17%

15 1,977,463 -96,472 32,405 1,913,396 5.91%
3 107,971 -7,059 6,481 107,393 5.86%
7 141,961 -11,765 15,122 145,319 5.81%
 5 91,975 -9,412 10,802 93,365 5.66%
12 163,956 -21,177 25,924 168,702 5.52%
3 111,970 -11,765 6,481 106,686 5.46%
2 99,973 -11,765 4,321 92,529 5.30%
6 115,969 -16,471 12,962 112,460 5.27%
5 123,966 -18,824 10,802 115,944 5.11%
6 95,974 -18,824 12,962 90,112 4.87%
Exhibit 1 - Income Statement of Nakul Textiles (in 000 `)
2019-20
Gross Sales 54025237
Discount 669437
Net Sales 53355800
COGS 37016343
Gross Profit 16339457
Operating Expenses 13227379
EBITDA 3112078
Depreciation 42271
EBIT 3069807
Financial Charges 871454
Donations 77812
EBT 2120541

Exhibit 2 - Allocation of costs to various Activities

Procurement Dyeing and
Expenses Amount (`) and Receiving Finishing
Raw Material Cost (Direct Expenses) 36334587
Processing Charges (Direct Expenses) 9994103
Office Expenses 69700 0% 0%
Selling Agents Commision 990524 0% 0%
Stationary Expenses 27772 0% 0%
Postage Expenses 18194 0% 0%
Telephone Expenses 36525 20% 20%
Electric Expenses 23171 0% 0%
Petrol Expenses 33662 0% 40%
Inward Freight Expenses 622481 100% 0%
Travelling Expenses 18786 0% 0%
Insurance Expenses 52177 0% 0%
Space Rent 304800 0% 0%
Computer Maintainence 2000 0% 0%
Staff Salary 513600 6% 0%
Depreciation 42271 0% 0%
Packing Materials 760600 0% 0%
Packing and Floding Labour Charges 397945 0% 0%
Contract Labour 43095 0% 0%
Total Operating Expenses 50285993

Exhibit 3- Sales Analysis by Product

Products Yards Sold Net Sales Boxes Sold
Full Voile 2048800 49171200 1576
Rubia 135800 2851800 97
Designer Pieces 23800 1332800 68
Total 2208400 53355800 1741

Exhibit 4 - Sales Analysis by Customer

Net Sales Full Voile

Customer Sales (Yards) (INR) Boxes
Devendra Cloth house 123400 3058200 82
Devraj and Sons 101750 2499400 71
Gopal Trading 93550 2267600 62
Jain Textile 87300 2133000 58
SK Rajeev Kumar 82200 2009200 60
M/S Surender Pal 80850 1953000 56
Satish Kumar 75700 1850400 48
Surendra Textile 75450 1831800 54
Seth Ragubir Singh 72700 1746200 50
Verma Woolen Textile 67150 1650800 46
Other Customers (34) 1348350 32356200 989
Total 2208400 53355800 1576

Exhibit 5 - Inventory Analysis

Yards Rate (Rs) Value (Rs)
Opening Stock of Grey Cloth 661353.75 16 10581660
Grey Cloth Purchased 1787419.9375 16 28598719
Closing Stock of Grey Cloth 227862 16 3645792
Total Yards Processed 2220911.6875 4.5 9994102.594
Opening Stock of Finished Goods - - -
2220911.6875 16 35534587
2015281.9375
Exhibit 6 - Cost Drivers of Different Activities
Activities Drivers
Procurement and Receiving Yards Procured
Dyeing and Finishing Yards Finished
Packaging Boxes Packed
Product Admin No of Products
Office Admin Turnover
Selling Expenses Turnover
Sales Support No of Customers
 Product Office Selling Sales
Packaging Admin Admin Expenses Support

0% 0% 100% 0% 0%
0% 0% 0% 100% 0%
0% 0% 100% 0% 0%
0% 0% 0% 0% 100%
0% 0% 15% 15% 30%
60% 10% 30% 0% 0%
0% 0% 0% 0% 60%
0% 0% 0% 0% 0%
0% 0% 0% 100% 0%
60% 0% 40% 0% 0%
60% 25% 15% 0% 0%
0% 50% 50% 0% 0%
37% 12% 10% 10% 24%
60% 25% 15% 0% 0%
100% 0% 0% 0% 0%
100% 0% 0% 0% 0%
100% 0% 0% 0% 0%

Yards per B Price/Yard Price/Box

1300 24 31200
1400 21 29400
 350 56 19600

Rubia Designer Total Boxes

Boxes Pieces Boxes Sold
9 12 103
5 7 83
8 5 75
7 6 71
2 4 66
5 3 64
8 6 62
3 3 60
5 2 57
4 5 55
41 15 1045
97 68 1741

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