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COURSE CODE: MS-04
COURSE TITLE:
ACCOUNTING AND FINANCE FOR MANAGERS
ASSIGNMENT CODE:
MS-04/TMA/SEM-II/2015
Question 1: Discuss the activities
performed by accounting personnel and the role and responsibilities that they
undertake in an organisation.
Question 2: You are required to prepare Funds Flow
Statement and Cash Flow Statement for the year ending 31st March 2015, based on
the information given below.
Balance Sheet
(As on 31st March)
(Rs.
in’ 000)
|
Liabilities
|
2014
|
2015
|
Assets
|
2014
|
2015
|
|
Trade creditors
|
100
|
40
|
Cash at bank
|
100
|
65
|
|
Bills payable
|
50
|
60
|
Accounts receivable
|
105
|
120
|
|
Outstanding expenses
|
25
|
20
|
Bills receivable
|
130
|
140
|
|
Bonds payable
|
220
|
140
|
Inventory
|
110
|
40
|
|
Accumulated depreciation
|
|
|
Machinery
|
120
|
160
|
|
-
On Machinery
|
30
|
35
|
Building
|
300
|
310
|
|
-
On
building
|
75
|
85
|
Land
|
60
|
130
|
|
Reserves
|
100
|
115
|
Patents
|
55
|
60
|
|
Retained earnings
|
130
|
170
|
|
|
|
|
Share capital
|
250
|
360
|
|
|
|
|
|
980
|
1025
|
|
980
|
1025
|
Profit from operations after
providing Rs. 10,000 as depreciation on building and Rs. 10,000 on machinery and
Rs. 5,000 as amortization on Patents for the year ‘April 14 – March 15’ was Rs.
35,000. Other revenues for the year were Rs. 40,000. An old machine with
original cost of Rs. 15,000 was sold at a loss of Rs. 5,000.
Question 3: Explain briefly the
technique of Marginal Costing. In what ways you consider this technique useful
in Management Accounting.
Question 4: A company manufactures
a single product in its factory utilizing 60% of its capacity. The selling
price and cost details are given below:
|
|
Rs.
|
|
Sales (6,000 units)
|
5,40,000
|
|
Direct materials
|
96,000
|
|
Direct labor
|
1,20,000
|
|
Direct expenses
|
18,000
|
|
Fixed overheads:
|
|
|
Factory
|
2,00,000
|
|
Administration
|
21,000
|
|
Selling and distribution
|
25,000
|
12.5% of factory overheads and 20%
of selling and distribution overheads are variable with production and sales.
Administrative overheads are wholly fixed.
Since the existing product could
not achieve budgeted level for two consecutive years, the Company decides to
introduce a new product with marginal investment but largely using the existing
plant and machinery.
The cost estimates of the new
product are as follows:
|
Cost elements
|
Rs. Per unit
|
|
Direct materials
|
16.00
|
|
Direct labor
|
15.00
|
|
Direct expenses
|
1.50
|
|
Variable factory overheads
|
2.00
|
|
Variable selling and distribution
overheads
|
1.50
|
It is expected that 2,000 units of
the new product can be sold at a price of Rs. 60 per unit. The fixed factory
overheads are expected to increase by 10%, while fixed selling and distribution
expenses will go up by Rs. 12,500 annually. Administrative overheads remain
unchanged. However, there will be an increase of working capital to the extent
of Rs. 75,000, which would take the total cost of the project to Rs. 8.75 lakh.
The company considers that 20%
pre-tax and interest return on investment is the minimum acceptable to justify
any new investment.
You are required to
(a) Decide whether the new product
be introduced.
(b) Make any further
observations/recommendations about profitability of the Company on the basis of
the above data, after making assumption that the present investment is Rs. 8
lakh.
Question 5: How do you envisage
your role as a Finance Manager in matters related to dividend policy? What are
the alternatives and factors that you may consider before finalizing your views
on dividend policy?
