TRINITY MBA

MBA- I Semester (I Year)

Subject:- ABD 101
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Q1) Differentiate between Cost Accounting and Financial

Accounting?
Ans. : Both cost accounting and financial accounting are the
parts of accounting. Both provide useful information to the
businessman for decision making. Both can be used for reducing
cost and increasing the profit and wealth of business. Following
are the differences between the two
Definition
Cost Accounting : Cost accounting is that part of accounting
which is helpful to calculate the cost and control the cost. In cost
accounting, we deeply study the variable cost, fixed cost,
overheads and capital cost.
Financial Accounting : Financial Accounting is that part of
accounting in which we record the transactions and we make the
financial statements. Through making the financial statement, it
provide information of profitability and financial position to the
interested parties.
Objective
Cost Accounting : We can not take all decisions on the basis of
information which have been provided by financial accounting.
After making the financial statements under financial accounting,
we calculate the cost of each unit and use the techniques of cost
accounting for better decision making.
Financial Accounting : Main objective of financial accounting is
to show the financial statement correctly.
Law
Cost Accounting : There is not any restriction on the cost
accounts. It can be made according to the need of company but

some company must audit their cost accounts under cost audit.
Financial Accounting : In financial accounting, there are lots of
law restrictions. For example, company accounts and financial
statements must be according to the format of company law. It
should also follow the rules of IFRS and income tax law.
Controlling
Cost Accounting : In cost accounting, we study the techniques
of controlling the cost. All the costs are calculated for the purpose
of controlling the cost.
Financial Accounting : In financial accounting, we just record
the transactions correctly. We do not care to control the cost.
Profit Analysis
Cost Accounting : In cost accounting, to find the profit per job
or per batch or per service unit is possible.
Financial Accounting : In financial accounting. We make the
income statement which shows the net profit or loss or whole
organization not one job or batch.
Record
Cost Accounting : In cost accounting, both actual transactions
record and estimations are used. For example budgetary control
and variance analysis, we set the standard cost which is based on
the estimations. These estimations may be differ from actual
cost.
Financial Accounting : In financial accounting, we use actual
transaction for recording purpose. We do not use the estimation
for preparing income statements and balance sheet.
Valuation of Inventory
Cost Accounting : In cost accounting, inventory's valuation will
be on cost.
Financial Accounting : In financial accounting, inventory's
valuation will be on the cost or market value which will be low.
Q2) Marginal costing provides basis for decision making? Explain

Marginal costing is very helpful in managerial decision making.

Management's production and cost and sales decisions may be
easily affected from marginal costing. That is the reason, it is the
part of cost control method of costing accounting.
Marginal cost is change in total cost due to increase or decrease
one unit or output. It is technique to show the effect on net profit
if we classified total cost in variable cost and fixed cost. The
ascertainment of marginal costs and of the effect on profit of
changes in volume or type of output by differentiating between
fixed costs and variable costs. In marginal costing, marginal cost
is always equal to variable cost or cost of goods sold. We must
know following formulae
a) Contribution ( Per unit) = Sale per unit - Variable Cost per
unit
b) Contribution = Fixed Cost + Profit
c) Profit Volume Ratio = Contribution/ Sale X 100
d ) Break Even Point is a point where Total sale = Total Cost
e) Break Even Point ( In unit ) = Total Fixed expenses /
Contribution
f) Break Even Point ( In Sales Value ) = Break even point
(in units) X Selling price per unit
g) Break Even Point at earning of specific net profit margin =
Total Contribution / Contribution per unit
) Explain in detail various accounting concepts.
OR
Q1) Differentiate between Cost Accounting and Financial Accounting?
Q2) Marginal costing provides basis for decision making? Explain
OR
Q2) Cost may be classified in a variety of ways according to their nature and the information
needs of management Explain and discuss the statement giving examples of classifications
required for different purposes.

Q3) Prepare a Cash budget for three months ending 30th June, 2007 from the following
particulars relating to Atlas Cycle Co., Ajmer.
2007
Total Sales
Material Purchases Salary
Selling on Cost
Months
Rs.
Rs.
Rs.
Rs.
January
80,000
40,000
6,000
3,800
February
1,00,000
80,000
8,000
4,200
March
60,000
80,000
8,000
6,100
April
1,20,000
1,00,000
10,000
3,800
May
1,60,000
1,43,000
12,000
4,300
June
1,40,000
1,00,000
10,000
6,800
Additional information:
1. 30% of Credit sales will be realized in the second month following whereas remaining
70% of Credit Sales will the realized in the month following the sales.
2. The materials purchases will be on credit and the creditors to be paid in the month
following the purchases.
3. Delay in payment of salary is half a month.
4. Selling on costs are to be paid in the same month.
5. The proportion of cash turnover to credit turnover is 1:3 in total turnover.
6. Advance income tax is to be paid in the month of April amounting to Rs.4,000.
7. The cash at bank on 1st April, 2007 estimated to Rs.40,000.
OR
Q3) The Durable Battery Co. furnished you the following information.
Particulars
Year 1996
First half (Rs.)
Second half (Rs.)
Sales
8,10,000
10,26,000
Profit earned
21,600
64,800
From the above you are required to compute the following assuming that the fixed cost
remains the same in both the periods:
1. Profit / Volume ratio,
2. Fixed cost
3. The amount of profit or loss where sales are Rs.6,48,000.
4. The amount of sales to earn a profit of Rs.1,08,000.
Q4) From the following figures extracted from the books of ABC Ltd. for the year ended on
31.3.2008. Prepare cost sheet showing:
Prime cost, Works cost, Cost of production, Cost of sales and Profit
Particulars
Amount Rs.
Direct Materials
70,000
Indirect Wages
10,000
Factory Rent and Rates
50,000
Indirect Materials
500
Depreciation of Office Assets
100
General Factory Expenses
5,700
General Selling Expenses
1,000
Office Salaries
4,500
Direct Wages
75,000

Office Rent and Rates

Depreciation of Machines
Salary to Managing Directors
Travelling Expenses
General Office Expenses
Carriage Outward Sales
Sales

500
1,500
12,000
1,100
1,000
1,000
2,50,000

OR
Q4) Barua Chemicals Ltd., Badalapur produces certain chemicals; the standard material cost
of the same is as follows:
Material Alfa: 40% @ Rs.20 per tones
Material Bita: 60% @ Rs.30 per tones
A standard production loss of 10% is normally expected in the manufacturing processes.
During February, 2007 the results of chemical productions are as follows:
Units
Tones
Material Alfa: @ Rs.18 per tones
90
Material Bita: @ Rs.34 per tones
110
Input
200
Less: Production loss
29
Output
171
You are required to calculate:
1. Material price variance and
2. Material yield variance
Q5) Vanita Engineering Ltd., Vijapur, has three Production Departments, viz. Assembly,
Cutting, Mixing and two Service Departments viz. Transport and Power. The following are the
total overheads expenses as per departmental distribution summary for the month of March,
2010.
Production Departments
Service Departments
Assembly
Rs.2,000
Transport
Rs.760
Cutting
Rs.2,500
Power
Rs.700
Mixing
Rs.3,000
The expenses of the Service Departments are charged out on a percentage basis as follows:
Particulars
Assembly Cutting Mixing Transport Power
Service Department Transport
30%
30%
30%
10%
Service Department Power
20%
20%
30%
30%
Prepare a Statement showing the apportionment of Service Department expenses to
Production Department by Simultaneous Equation Method.
OR
Q5) On 1st March, 2009 the stock of a component in the stores was 500 units @ Rs.300 per
hundred. During the three months the receipts and issues were as follows:
Purchased
March
400 units @ Rs.400 per hundred
April
500 units @ Rs.500 per hundred
May
600 units @ Rs.600 per hundred

Issued
March
300 units
April
400 units
May
500 units
When stock was taken on 31st May, 2009, a discrepancy of 50 units was revealed.
Prepare a Stores Ledger Card under First In First Out Method in the books of Hamam Ltd.,
Himmatpur.
******************************Best of Luck*******