QbWorking Capital Management, Factoring, Cost Comparison
8 marks very hard
Case: Receivables management and factoring scenario
A firm has a total sales of ₹ 200 lakhs of which 80% is on credit. It is offering credit terms of 2/40, net 120. Of the total, 50% of customers avail of discount and the balance pay in 120 days. Past experience indicates that bad debt losses are around 1% of credit sales. The firm spends about ₹ 2,40,000 per annum to administer its credit sales. These are avoidable as a factor is prepared to buy the firm's receivables. He will charge 2% commission. He will pay advance against receivables to the firm at an interest rate of 18% after withholding 10% as reserve.
Q1Cost Accounting and Financial Management
20 marks very hard
Answer the following:
Q1Cost of Debt/Finance
0 marks easy
A company issues 25,000, 14% debentures of ₹ 1,000 each. The debentures are redeemable after the expiry period of 5 years. Tax rate applicable to the company is 35% (including surcharge and education cess). Calculate the cost of debt after tax if debentures are issued at 5% discount with 2% flotation cost.
Q2Cost Accounting/Overhead Recovery
8 marks very hard
M.L. Auto Ltd. is a manufacturer of auto components. Expenses for 2014: Opening Stock of Material ₹1,50,000, Closing Stock of Material ₹2,00,000, Purchase of Material ₹18,50,000, Direct Labour ₹9,50,000, Factory Overhead ₹3,80,000, Administrative Overhead ₹2,50,400. During 2015, the company received an order from a car manufacturer estimating material cost ₹8,00,000 and labour cost ₹4,50,000. M.L. Auto Ltd. charges factory overhead as a percentage of direct labour and administrative overhead as a percentage of factory cost based on previous year's cost. Cost of delivery of the components at customer's premises is estimated at ₹45,000.
Q3Financial Accounting/Trading and P&L Account
8 marks hard
VRA Limited has provided the following information for the year ending 31st March, 2015: Debt Equity Ratio 2:1, 14% long term debt ₹50,00,000, Gross Profit Ratio 30%, Return on equity 50%, Income Tax Rate 35%, Capital Turnover Ratio 1.2 times, Opening Stock ₹4,50,000, Closing Stock 8% of sales. You are required to prepare Trading and Profit and Loss Account for the year ending 31st March, 2015.
Q3Sales Budget, RWA-H
8 marks very hard
XY Co. Ltd manufactures two products viz., X and Y and sells them through two divisions, East and West. For the purpose of Sales Budget to the Budget Committee; following information has been made available for the year 2014-15: [Budgeted and Actual Sales table provided]. Adequate market studies reveal that product X is popular but under priced. It is expected that if the price of X is increased by ₹ 1, it will find a ready market. On the other hand, Y is overpriced and if the price of Y is reduced by ₹ 1, it will have more demand in the market. The company management has agreed for the aforesaid price changes. On the basis of these price changes and the reports of salesmen, following estimates have been prepared by the Divisional Managers: [Percentage increase table]. With the help of intensive advertisement campaign, following additional sales (over and above the above mentioned estimated sales by Divisional Mangers) are possible: [Additional sales table]. You are required to prepare Sales Budget for 2015-16 after incorporating above estimates and also show the Budgeted Sales and Actual Sales of 2014-15.
Q3Balance Sheet Analysis, RWA-H
8 marks very hard
Balance Sheets of KAS Limited as on 31st March, 2014 and 31st March, 2015 are furnished below: [Balance sheet showing Equity Share Capital, General Reserve, Profit & Loss Account, 13% Debentures, Current Liabilities, Proposed Dividend, Provision for Income tax with amounts in Rupees for both years]
Q5Cost Accounting - Cost Methods and Cost Units for Different
16 marks very hard
निम्नलिखित उद्योगों के लिए लागत बिधि एवं लागत की इकाई का उल्लेख कीजिए:
Q5Cost Accounting - Fixed Capacity Accounting Treatment
0 marks easy
लागत लेखांकन में निश्चित क्षमता का लेखांकन व्यवहार कैसे किया जाएगा?
Q5Capital Budgeting - NPV vs IRR
0 marks easy
परियोजनाओं के मूल्यांकन में शुद्ध वर्तमान मूल्य (NPV) तथा आंतरिक प्रत्यय दर (IRR) में अंतर स्पष्ट कीजिए।
Q5Capital Structure - Equity Financing
0 marks easy
जोखिम-पूंजी वित्तीयन से क्या आशय है? इसकी विभिन्न विधियों को स्पष्ट कीजिए।
Q6Contract Costing
8 marks very hard
PVK Constructions commenced a contract on 1st April, 2014. Total contract value was ₹ 100 lakhs. The contract is expected to be completed by 31st December, 2016. Actual expenditure during the period 1st April, 2014 to 31st March, 2015 and estimated expenditure for the period 1st April, 2015 to 31st December, 2016 are as follows:
[Table with Material issued, Direct Wages paid, Direct Wages outstanding, Plant purchased, Expenses paid, Prepaid Expenses, Site office expenses for two periods]
Q6Contract Costing
8 marks very hard
Case: P.B.K. Construction Limited received a contract on 1 April 2014 with value ₹100 lakh, to be completed by 31 December 2016. [Financial data table provided showing amounts from 1 April 2014 to 31 March 2015 and 1 April 2015 to 31 December 2016]
P.B.K. Construction Limited | 1 अप्रैल, 2014 को एक ठेका प्राप्त किया। ठेके का मूल्य ₹100 लाख था। ठेके को 31 दिसंबर, 2016 को पूरा किया जाना है।
Q7Cash Flow Statement
0 marks easy
Case: Balance sheet as at 31st March, 2014 and 2015 (Amount in Rupees):
Assets | As at 31st March 2014 | As at 31st March 2015
Goodwill | ₹ 10,00,000 | ₹ 7,75,000
Land & Building | ₹ 68,00,000 | ₹ 61,20,000
Plant & Machinery | ₹ 75,12,000 | ₹ 1,07,95,000
Investment | ₹ 25,00,000 | ₹ 21,25,000
Stock | ₹ 33,00,000 | ₹ 27,50,000
Debtors | ₹ 24,45,000 | ₹ 36,20,000
Cash and Bank | ₹ 14,93,000 | ₹ 19,25,000
Total | ₹ 2,50,50,000 | ₹ 2,81,10,000
Following additional information is available:
(i) During the financial year 2014-15 the company issued equity shares at par.
(ii) Debentures were redeemed on 1s…
You are required to prepare a Cash Flow Statement for the year ended 31st March, 2015.
Q7Cost Accounting, Cash Management, Asset Financing, Capital S
16 marks very hard
Answer any four of the following:
Q11Contract Accounting, Profit Recognition
0 marks hard
Case: Contract accounting scenario with material disposal, plant valuation, and work certification details
Part of the material procured for the contract was unsuitable and was sold for ₹ 2,40,000 (cost being ₹ 2,55,000) and a part of plant was scrapped and disposed of for ₹ 80,000. The value of plant at site on 31st March, 2015 was ₹ 2,50,000 and the value of material at site was ₹ 73,000. Cash received on account to date was ₹ 36,00,000, representing 80% of the work certified. The cost of work uncertified was valued at ₹ 5,40,000.
Estimated further expenditure for completion of contract is as follows:
• An additional amount of ₹ 4,62,500 would have to be spent on the plant and the residual value of the plant on the completion of the contract would be ₹ 67,500.
• Site office expenses would be the same amount per month as charged in the previous year.
• An amount of ₹ 1,57,500 would have to be incurred towards consultancy charges.
Required: Prepare Contract Account and calculate estimated total profit on this contract.