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ASSIGNMENT
DRIVE FALL
PROGRAM
SUBJECT CODE & NAME
SEMESTER
BK ID
CREDITS
MARKS
2013
BBA
BBA402 MANAGEMENT ACCOUNTING
4
B1713
4
60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q.1 Budgetary control is a strong business tool that helps companies maximize profits. Explain the
advantages of budgetary control.
Ans : Advantages of budgetary control :
Every business needs to have a budgetary control system in place for effective and proper financial
planning for the business. Sometimes the lack of a proper accountability program in a business may
cause the business to make losses and incur unnecessary expenses. The benefits of budgetary
control in business include the following;
Q.2 The success of a business enterprise depends to a great extent on how efficiently and
effectively it can control costs.
Give the meaning of standard costing. Describe estimated cost and standard cost.
Ans : Meaning of standard costing :
Standard costing is an important subtopic of cost accounting. Standard costs are usually associated
with a manufacturing company's costs of direct material, direct labor, and manufacturing overhead.
Rather than assigning the actual costs of direct material, direct labor, and manufacturing overhead
to a product, many manufacturers assign the expected or standard cost. This means that a
manufacturer's inventories and cost of goods sold will begin with amounts reflecting the standard
costs, not the actual costs, of a product. Manufacturers, of course, still have to pay the actual costs.
As a result there are almost always differences
Q.3 Variance analysis is a tool for measuring performance and depends on the principle of
management by exception. Explain the uses of variance.

2. From the following information, calculate sales margin price variance and sales margin volume
variance.
Budgeted sale
Actual sale
product Qty.
units
A
600
Sales
price per
unit (rs)
20
B
400
15
Standard product Qty.
price per
units
unit (rs)
12
A
800
sales
price
per (rs)
24
9
12
1000
B
600
1400
Ans : The uses of variances :
Variance analysis, also described as analysis of variance or ANOVA, involves assessing the difference
between two figures. Its uses are described below :
1. Budget vs. Actual Costs:
Variance analysis is important to assist with managing budgets by controlling budgeted versus actual
costs. In program and project management, for example, financial data are generally assessed at key
intervals or milestones. For instance, a monthly closing report might provide quantitative data about
expenses, revenue and remaining inventory levels.
Q.4 The following are the summarised trading and profit & loss accounts of Mysore Jewellers for
the
year ending 31 December 2002 and the balance sheet as on that date.
Trading and profit & loss account
To opening stock
By closing stock
To purchases
To gross profit
76,250 By sales
98,500
3,22,250
2,00,000
5,98,500
To selling expenses
22,000
To administrative expenses 98,000
To loss on sale of assets
2,000
To net profit
90,000
2,12,000
5,00,000
5,98,500
By gross profit b/d
2,00,000
By dividend on shares
9,000
By profit on sale of shares
3,000
You are required to calculate the following ratios:
1. Gross profit ratio
2. Net profit ratio
3. Operating ratio
4. Operating profit ratio
5. Stock turnover ratio
2,12,000

3. 6. Turnover of fixed assets
7. Return on total resources
A
Calculation of all the ratios
10
10
Q.5 Explain the determinants of working capital requirements.
Ans : Determinants of working capital requirements :
Requirements Of working capital depend upon various factors such as nature of business, size of
business, the flow of business activities. However, small organization relatively needs lesser working
capital than the big business organization. Following are the factors which affect the working capital
of a firm:
1. Size Of Business:Working capital requirement of a firm is directly influenced by the size of its business operation. Big
business organizations require more working capital than the small business organization. Therefore,
the size of organization is one of the major determinants of working capital.
Q.6 From the following information prepare (i) a statement of sources and uses of funds and (ii) a
schedule of changes in working capital for M/s. Eshwari & co. Balance sheets as on 31stMarch
2010 and 2011 are:
Additional Information
(i)
Depreciation of Rs. 2,500 charged on Land & Buildings
(ii)
Building amounting to Rs. 5,000 was sold for Rs. 4,700.
A
Calculation and preparation of schedule of changes
in working capital
Preparation of statement of sources and uses of
funds
5
5
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