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Transcript of IMT-58
Management Accounting. ........................................ Page 1 of 4 ............................................................................... IMT-58
Subject Code: IMT-58
Subject Name : Management Accounting
Objective: This Course intends to: 1. Develop basic understanding of cost management, 2. Introduce budgetary control and standard costing techniques as control mechanism, and 3. Impart analytical technique of cost estimation, cost analysis and benchmarking. Contents : UNDERSTANDING COSTS Concepts of Cost; Elements of Cost; Classification of Costs; Cost Ascertainment; Methods of Costing; Techniques of Costing; Systems of Costing. OVERHEADS ANALYSIS Classification of Overheads; Overheads Distribution Stages; Distribution of Factory Overheads; Departmentalization of Overheads; Distribution of Office and Administration Overheads; Distribution of Selling and Distribution overheads; Actual Versus Pre-Determined Overhead Rates; Over and Under-absorption of Overheads.
JOB COST ANALYSIS Meaning; Key Terms PROCESS COST ANALYSIS Meaning and Utility; General Principles; Difference between Job Costing and Process Costing; Process Losses and Wastage; By-Products and Joint Products; MARGINAL COSTING AND COST VOLUME PROFIT ANALYSIS Absorption Costing; Marginal Costing; Difference Between Absorption Costing and Marginal Costing; Marginal Costing and Direct Costing; Marginal Costing and Differential Costing; Marginal Cost; Profit Planning; Cost Volume Profit Analysis; Break-Even Analysis; Key Factor; 5.12 Break-Even Chart; Angle of Incidence; Assumptions Underlying CVP Analysis/Break-Even Charts; Utility of CVP Analysis DECISIONS INVOLVING ALTERNATIVE CHANGES Concept of Decision-Making; Concept of Relevant Costs; Concept of Differential Costs; Steps in Decision-Making; Determination of Sales mix; Exploring New Markets; Discontinuance of a Product Line; Make or Buy Decisions; Equipment Replacement Decision; Change Versus Status Quo; Expand or Contract; Shut Down or Continue BUDGETARY CONTROL AND RESPONSIBILITY ACCOUNTING Meaning of Budget; Meaning of Control; Meaning of Budgetary Control; Budgetary Control as a Management Tool; Limitations of Budgetary Control; Forecasts and Budgets; Installation of Budgetary Control System; Classification of Budgets; Fixed and Flexible Budgeting; Control Ratios; Responsibility Accounting STANDARD COSTING Meaning of Standard Costing; Budgetary Control and Standard Costing; Standard Costing as a Management Tool; Limitations of Standard Costing; Meaning of Standard Costs; Standard Costs and Budgeted Costs; Determination of Standard Costs VARIANCE ANALYSIS Cost Variances; Direct Material Variances; Direct Labour Variances; Overhead Variances; Sales Variances; Disposal of Variances
Management Accounting. ........................................ Page 2 of 4 ............................................................................... IMT-58
Notes:
a. Write answers in your own words as far as possible and refrain from copying from the text books/handouts.
b. Answers of Ist Set (Part-A), IInd Set (Part-B), IIIrd Set (Part – C) and Set-IV (Case Study) must be sent together.
c. Mail the answer sheets alongwith the copy of assignments for evaluation & return.
d. Only hand written assignments shall be accepted.
A. First Set of Assignments: 5 Questions, each question carries 1 marks.
B. Second Set of Assignments: 5 Questions, each question carries 1 marks.
C. Third Set of Assignments: 5 Questions, each question carries 1 marks. Confine your answers to 150 to 200 Words.
D. Forth Set of Assignments: Two Case Studies : 5 Marks. Each case study carries 2.5 marks.
ASSIGNMENTS FIRST SET OF ASSIGNMENTS Assignment-I = 5 Marks
PART– A
1. State three points of similarities between financial accounting and cost accounting.
2. Prepare a chart showing the different elements of cost.
3. What is cost centre and does it related to cost units.
4. What is the difference between allocation and apportionment of overheads?
5. Discuss the importance of machine hour rate as a basis for the absorption of factory overheads.
SECOND SET OF ASSIGNMENTS Assignment-II = 5 Marks
PART–B
1. Give four points essential of job costing.
2. Describe briefly the main features of process costing. Name the industries where process costing can
be applied. Also compare process costing with job costing.
3. What is absorption costing? Give the main limitations of absorption costing.
4. Define cost-volume profit analysis and explain its main features.
5. From the following particulars, calculate all material variances.
Standard Actual Qty. Kgs. Price Qty. Kgs. Price A 10 8 10 7 B 8 6 9 7 C 4 12 5 11
THIRD SET OF ASSIGNMENTS Assignment-III = 5 Marks
PART– C 1. Distinguish between
a. Budgetary control and standard costing
b. Standard cost and standard costing
Management Accounting. ........................................ Page 3 of 4 ............................................................................... IMT-58
c. Standard costing and estimated costing
d. Basic standard and current standard
2. Compare and contrast differential cost analysis and marginal costing.
3. A product passes through three processes. During March, 2011, 1,000 finished units are produced with
the following expenditure:
Process A (Rs.) Process B (Rs.) Process C (Rs.) Direct Material 1,500 2,600 2,000 Direct Labour 5,000 4,000 3,000
Overhead expenses amounted in all to Rs. 6000. They are to be apportioned on the basis of direct
wages. Main raw materials issued to Process A (besides above) were worth Rs. 6,000. Ignoring the
question of stock prepare the Process Accounts concerned.
4. From the following particulars calculate (i) Contribution (ii) P/V Ratio (iii) Break even point in units and in
rupees. (iv) What will be the selling price per unit if the break even point is brought down to 25, 000
units?
Fixed expenses Rs.2,50,000
Variable cost per unit Rs. 12
Selling price per unit Rs.18
5. Define the term ‘budget’ as used in cost accounting, and explain what is meant by ‘budgeting control’.
FOURTH SET OF ASSIGNMENTS Assignment-IV = 2.5 Each Case Study
CASE STUDY - I Two manufacturing companies which have the following operating details decided to merge:
Company No. 1 Company No.2
Capacity utilization (%) 90 60
Sales (Rs. lakhs) 540 300
Variable costs (Rs. lakhs) 396 225
Fixed costs (Rs. Lakhs) 80 50
Assume that the proposal is implemented, calculate:
a. Break even sales of the merged plant and the capacity at that stage.
b. Profitability of the merged plant at 80% capacity utilization.
c. Sales turnover of the merged plant to earn profit of Rs. 75 lakhs.
d. When the merged plant is woking at a capacity t earn a profit of Rs. 75 lakhs what percentage
increase in selling price is required to sustain an increase of 5% in fixed overheads.
Management Accounting. ........................................ Page 4 of 4 ............................................................................... IMT-58
CASE STUDY-II
The cost sheet of a product is given as follows: Rs.
Direct Materials 10
Direct Wages 5
Factory overheads
Fixed 1
Variable 2
Administration expenses 1.5
Selling & Distribution Overheads
Fixed 0.5
Variable 1
21
The selling price per unit is Rs. 25. The above figures are for an output of 50,000 units whereas the
capacity of the firm is 60,000 units. A foreign customer is desirous of buying 10,000 units at a price of
Rs. 19 per unit. The extra cost of exporting the product is Re. 0.5 per unit. Advise the manufacturer as
to whether the order should be accepted.