Section-A

problem1) describe management accounting as an effective tool of financial control.

problem2) What do you understand by cash from operating activities? How is it computed?

problem3) The “volume-cost-profit relationship provides management with a simplified framework for organizing its thinking on a number of problems.” describe

problem4) Recently a conference speaker discussing budgets & standard costs made the following statement- “Budgets & standard costs are not the same things, they have various purposes & are set up & used in different ways, yet a specific relationship exists between them.”

In the light of above statement, identify the similarities & differences between budgets & standards.

Section-B

Case Study

Batty & Co. is presently working at 50% capacity & produces 10,000 units. At 60% working raw material cost increases by 2% & selling price falls by 2%. At 80% working raw material cost increases by 5% & selling price falls by 5%.

At 50% capacity working product costs Rs.180 per unit & is sold at Rs.200 per unit. The unit cost of Rs.180 is made up as follows:

    Material                               Rs.100
    Wages                                 Rs.30
    Factory Overheads              Rs.30 (40% fixed)
Administration Overheads        Rs.20 (50% fixed)

problem1) Prepare a marginal cost statement showing the estimated profit of the business when it is operated at 60% & 80% capacity. Also compute break-even points at these levels.