MANAGEMENT ACCOUNTING II (MANAC II)

(Finance Area Core Course for BM Juniors - Jamshedpur Batch)

TERM II (ACADEMIC YEAR 2021-22)

END TERM EXAM (An Open Book Examination)

Total Marks = 40, Duration = 105 Minutes

SUBMISSION TIME – 10.50 AM on 31st December 2021 (Latest)

The Instructions
In respect of this question paper, a separate answer booklet has been
provided (to be shared before 09.00 AM today) and you have to provide your
answers in the structured format as given in that answer booklet. No
additional sheets should be attached (along with the answer booklet) under
any circumstances whatsoever. In case any student sends any excel sheet or
other documents (as attachments) along with the answer booklet to Ms. Itika
Ganguly - that additional document would simply be “deleted” by Ms. Itika.
Please do not forget to write your full name, your roll number, your date of
birth & your year of birth in the spaces provided in that answer booklet (very
important). You are required to answer ALL questions. Students may
certainly use calculators, mobile phones, internet, e-mail, whatsapp etc while
writing this examination. In case the workings are not shown clearly in
respect of answers to ALL questions (as may be applicable), no mark would
be awarded in respect of these questions. While sending the answer sheets
(duly filled in) to Ms. Itika (as an e-mail attachment) latest by 10.50 AM
today there is absolutely no need to mark a copy (of that e-mail) to me.

E-Mail id of Ms Itika is itika@xlri.ac.in

Question No I (Maximum Marks = 04)
(You are required to provide your answer in the answer booklet in the structured format as given)

ONLINE EXAMS ARE EASY LIMITED which manufactures and sells a single
commodity computed their profit for the financial year ended 31st March 2021 as per the
marginal costing system and also as per the absorption costing system for the purpose of
developing internal management reports. The profit computed (under the marginal costing
approach) amounted to Rs 76,456 and the profit computed (under the absorption costing
approach) amounted to Rs 61,056. As per the company policy, the fixed administrative &
selling overhead absorption rate = Rs X per kg and the fixed production overhead
absorption rate = Rs Y per kg. The finished goods inventory as on 31st March 2021 was
equal to Z kgs. The opening and closing WIP inventory of the said company during the
said financial year was “ZERO”.

ADDITIONAL INFORMATION

While solving the above question please take X = Last digit of your roll number UPON 4.
For example – if your roll number is 98, X = 8 / 4 = Rs 2.00 per kg. However, in case the
last digit of your roll number is either “0” or “1”, please take it as 10. Meaning – in case
your roll number is 120 (say) or 71 (say), X = 10 / 4 = Rs 2.50 per kg.

In this case, please take Y = Last digit of your date of birth UPON 2. For example – if
your date of birth is 14th, Y = 4 / 2 = Rs 2.00 per kg. However, in case the last digit of
your date of birth is either “0” or “1”, please take it as 10. Meaning – in case your date of
birth is 30th (say) or 21st (say), Y = 10 / 2 = Rs 5.00 per kg.

In this case, please take Z = Your Year of birth * 5. For example – if your year of birth is
1998, Z = 1998 * 5 = 9990 Kgs.
Question No II (Maximum Marks = 08)
(You are required to provide your answer in the answer booklet in the structured format as given)

The Production Unit of THINK HARD LIMITED while evaluating their performance for
the calendar year 2020 had detected that “actual cost of production” exceeded the
“budgeted cost of production” by Rs X. The Production Unit is yet to institute a new (and
modified) costing system, which might aid in identifying the exact reasons for incurrence
of such excess cost. The Production Unit is aware that the entire excess cost had occurred
either due to some controllable factors or non-controllable factors. Now, if such excess
costs are identified as due to controllable factors subsequent to implementation of the new
(and modified) costing system, the same would be rectified by the concerned Production
Unit by incurring an additional expenditure of Rs Y. However, although the new (and
modified) costing system may be viewed as an excellent control device, it goes without
saying that implementation of the same in their company is a costly affair as well costing
Rs 0.80 Y. You are required to advice the Production Unit as to under what
circumstances they may consider implementation of the new (and modified) costing
system.

ADDITIONAL INFORMATION

While solving the above question please take X = Your Year of birth * 100. For example
– if your year of birth is 1995, X = 1995 * 100 = Rs 199500.

In this case, please take Y = Last digit of your date of birth * 10000. For example – if
your date of birth is 23rd, Y = 3 * 10000 = Rs 30000 and 0.80 Y = Rs 24000. However, in
case the last digit of your date of birth is “0”, please take it as 1. Meaning – in case your
date of birth is 30th (say), then, Y = 1 * 10000 = Rs 10000 and 0.80 Y = Rs 8000.
Question No III (Maximum Marks = 08)
(You are required to provide your answer in the answer booklet in the structured format as given)
The manufacturing process of ONLINE EXAMS CAN BE CRACKED LIMITED is such that
it presently produces 3 lakhs kgs of Product A and 6 lakhs kgs of product B simultaneously from
9 lakhs kgs of raw material Z (every year). The selling price of product A is Rs 20 per kg as
against the selling price of Rs 15 per kg of product B. Processing costs amount to Rs 54 lakhs per
year comprising raw material Z (9 lakhs kgs @ Rs 3 per kg), other variable processing costs
amounting to Rs P lakhs, remaining cost being in the nature of fixed processing charges. In a
particular year, the said company had obtained a special bulk order of an additional Q kgs of
product A at a highly discounted price of Rs 6.00 per kg, which it is proposing to accept. The
existing market price per kg of product A would not be affected due to acceptance of this special
bulk order at a discounted price, but, this action by the company is likely to reduce the selling
price of product B in the market uniformly on all sales of product B by the company. It may
please be noted that the said company has installed capacity for processing 12 lakhs kgs of raw
material Z in a year. Based on the above set of information, you are required to answer the
specific question given in the answer booklet in the structured format (as given).

ADDITIONAL INFORMATION
Please take P = (Last digit of your date of birth + 3) * 2. For example – if your date of birth is
20th, P = (0 + 3) * 2 = Rs 6.00 Lakhs.
In this case, please take Q = Last digit of your roll number * 10000. For example – if your roll
number is 73, Q = 3 * 10000 = 30,000 Kgs. However, in case the last digit of your roll number is
“0”, or “1”, please take it as 10. Meaning – in case your roll number is 130 (say) or 91 (say),
then, Q = 10 * 10000 = 1,00,000 Kgs.

Question No IV (Maximum Marks = 12)

(You are required to provide your answer in the answer booklet in the structured format as given)
From the following information related to a departmental store called SENGO SPECIAL STORES
(exempted from income taxes) for the three months period ended 31st March 2022, you are required to
prepare monthly cash budgets for the months of January 2022, February 2022 and March 2022 distinctly
showing cash receipts from customers as budgeted cash receipts item and cash payments to suppliers as
budgeted cash payment item. It is anticipated that the working capital items as on 1st January 2022 will be
as under.
DETAILS Rs Lakhs
Cash & Bank Balances Y
Short Term Investments 300
Dues from Customers (i.e. Receivables) 2570
Inventories (of merchandize goods) 1300
 Dues to Suppliers (i.e. Payables) 2110

Continued in the next page………….

The budgeted Profit Statement for 3 months (in Rs Lakhs) is also provided below.

DETAILS Jan 2022 Feb 2022 Mar 2022

Sales (cent percent credit sales) X 0.85 X 0.80 X

(Material cost of merchandize goods sold) (0.75 X) (0.65 X) (0.63 X)
(All other expenses except material cost of merchandize goods ) (0.15 X) (0.12 X) (0.11 X)
NET PROFIT 0.10 X 0.08 X 0.06 X

Budgeted balances at the end of each month are also given below. (Rs Lakhs)

DETAILS Jan 2022 Feb 2022 Mar 2022

Short Term Investments 700 0 200

Dues from Customers (i.e. Receivables) 2600 2500 2350
Inventories (of merchandize goods) 1200 1100 1000
Dues to Suppliers (i.e. Payables) 2000 1950 1900

Depreciation amounting to Rs 60 Lakhs is included in the budgeted expenditure for each month. Capital
expenditure amounting to Rs 300 Lakhs is expected to be incurred during February 2022 and proceeds
from sale of some fixed asset items amounting to Rs 70 Lakhs is expected in March 2022.

ADDITIONAL INFORMATION

While solving the above question, please take X = Your year of birth. For example – if
your year of birth is 2000, X = 2000, 0.75X = 1500 etc (all figures are in Rs Lakhs as
distinctly clarified in the question itself).

VERY IMPORTANT
Round of all numbers to the nearest lakh. For example, if your year of birth is the year
1993, 0.75X works out to 1993 * 0.75 = 1494.75. Suitably round off this number to 1495
and then proceed. Apply the same method while converting all numbers given in the
question in terms of X.

Please take Y = (Last digit of your roll number + 5) * 100. For example – if your roll
number is 71, Y = (1 + 5) * 100 = Rs 600 Lakhs.
Question No V (Maximum Marks = 4 + 3 + 1 = 08)
(You are required to provide your answers in the answer booklet in the structured format as given)

A new steel plant, namely UNEXPECTED LIMITED is all set to start its operations. This new steel
plant owns a captive iron ore mine which is located at a distance of 10 Km from the factory. The steel
plant will transport its requirement of iron ore (to be used for manufacture of steel) from this captive iron
ore mine on a regular basis. On an average the steel plant will require 24000 tons of iron ore per month.
For transporting iron ore on a regular basis (from the captive mine), the concerned company is in the
process of evaluating the following three options, namely, (A), (B) and (C) as given below.

(A) Buy a fleet of 10 ton capacity trucks by taking a bank loan that attracts 10% interest per annum
(B) Buy a fleet of 8 ton capacity trucks by taking a bank loan that attracts 10% interest per annum
(C) Outsource the job to a local transporter who would charge Rs 200 per ton of iron ore transported

The works manager of the steel plant has furnished the following (reliable) estimates to the Management
Accountant and requested her to offer her advice as to which option would be more cost effective for the
company.

Relevant Details In case the company buys In case the company buys
10 ton capacity trucks 8 ton capacity trucks
Cost of one truck (diesel operated) Rs 1.25 X Lakhs Rs X Lakhs
Life of each truck (salvage value = zero) 5 years 5 years
Kilometer (Km) run per liter of diesel Y Kms 1.25 Y Kms
Salary per month per driver Rs 25000 Rs 20000
Additional drivers required as back up 4 drivers 5 drivers
Other maintenance cost per truck per month Rs 1.00 Lakh Rs 0.75 Lakhs

Total fixed expenses per month is estimated at Rs 5.00 Lakhs. Cost of diesel is estimated as Rs 80.00 per
liter. Each truck will make 5 round trips (to and fro) per day and the company will operate 24 days per
month (on an average).

ADDITIONAL INFORMATION
Please take X = Last digit of your roll number * 5 Lakhs. For example – if your roll number is
74, X = 4 * 5 = Rs 20 Lakhs and 1.25 X = Rs 25 Lakhs. However, in case the last digit of your
roll number is either “0” or “1”, please take it as 10. Meaning, in case your roll number is either
100 (say) or 61 (say), X = 10 * 5 = Rs 50 Lakhs and 1.25 X = Rs 62.50 Lakhs.
In this case, please take Y = Last digit of your date of birth * 2 Kms. For example – if your date
of birth is 14th, Y = 4 * 2 = 8 Kms and 1.25 Y = 10 Kms. However, in case the last digit of your
date of birth is either “0” or “1”, please take it as 10. Meaning, in case your date of birth is 20th
(say) or 31st (say), Y = 10 * 2 = 20 Kms and 1.25 Y = 25 Kms.