Attempt all the problems

problem1)

“Fixed costs are really variable. More you produce less they become”. Illustrate the statement.

problem2)

“Funds Flow Statements also suffers from window dressing of accounts and therefore fails to give true view of funds movement.” Do you agree with this criticism? Give your opinion.

problem3)

prepare short notes on the following:

(i) Budget Committee

(ii) Budget Key Factor

(iii) Master Budget

(iv) Overhead Budget

problem4)

Differentiate the following:

(i) Responsibility Accounting and Conventional Cost Accounting

(ii) Standard Costing and Budgetary Control

problem5)

From books of Aggarwal Bors, following information has been extracted:

                                       Rs.
Sales                          2,40,000
Variable costs              1,44,000
Fixed costs                     26,000
Profit before tax              70,000
Rate of tax                         40%

Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is expected to Rs. 4000. New plant would increase sales volume by Rs. 40,000. It could be supposed that ratio between sales and variable costs remain same. Compute.

(i) New BEP

(ii) Sales to earn present level of profit

(iii) Sales to earn expected profit on proposed investment

(iv) Maximum profit potential after tax and plant expansion