(1)i.ii.iii.(2) i.ii.PART AWhat are the functions of Management Accounting? Explain.'Cost Accounting is an aid to Management Accounting" Discuss.Explain the difference between Cost Accounting and Management(05 Marks)"The break-even point is reached at a lower level of activity in the undertaking with alow fixed cost. Critically comment on the above statement.(05 Marks)SalesDirect materialsDirect wagesFactory overheadsSelling and AdminExpenses (15% of sales)Profit (Loss)Alfa Ltd., produces four products in its factory. The volume of production and salesachieved is considerably lower than normal so there has been substantial under-recoveryof overheads. The sales and cost particulars (in Rs. million) are as follows.A1602440481Accounting.2424(10 Marks)(05 Marks)ProductBC2000 80D4016332 88324864 403061226 (20) 1540% of factory overheads vary at normal volumes and the selling and administrationoverheads vary to the extent of 5% of sales. 20% of sales of product C is done inconjunction with product A and as much as the discontinuance of product C will bringdown the sales of product A by 10%.(a)Prepare a contribution format income statement.(04 Marks)(b)In view of the loss reported for product C, the management is consideringdiscontinue it. In that event the company can save a sum of Rs. 8 million in fixedexpenses. What is the financial implication of discontinuing product C?(05 Marks) (3)iii.(5)(i)(ii)(4) (i)(ii)(ii)The P/V (profit volume) ratio of a company is 50% and the margin of safety is 40%. Youare required to calculate the BEP (Break-even point) and the net profit if the volume ofsales is Rs.800,000/=.(06 Marks)(6) (i)Explain the difference between relevant costs, irrelevant costs and sunk costs.(04 Marks)(ii)A company manufactures and markets three products that are made from the same set ofmachines. Production is limited by machine capacity. Using the data given below, youare required to indicate the priorities for products A, B, and C with a view to maximizeprofits.Raw materials (Rs.)Direct Labour (Rs.)Other Variable Cost (Rs.)Selling Price (Rs.)Standard machine Timerequired (per unit)A(iii)In the following year, the company faces extreme shortage of raw materials. It is notedthat 3kg, 4kg, 5kg of raw materials are required to produce one unit of A, B, and Crespectively. How would product priorities change".(06 Marks)PART B2.250.500.305.9039 minuteb)B(Cost per unit)3.250.500.456.002C4.250.500.717.0020 minutes 28minutes(10 Marks)"Financial management is mainly concerned with obtaining required funds in theappropriate mix and utilizing them efficiently". Explain.(08 Marks)"The wealth maximization objective of a firm is superior to its profit maximizationobjectives" Do you agree? Explain.(12 Marks)(iii)A family borrows Rs.600,000 loan at 10% interest and agrees to pay the loan with 4 equalannual installments.a)If the first installment is paid at the end of the year, what is the value of aninstallment?What do you mean by time value of money?(05 Marks)Investments we make today generate cash flows at different time intervals in the future.This makes the evaluation process complicated. How do you address this issue whenevaluating investment projects?(05 Marks)Prepare an amortization schedule showing how the interest and the principalare paid over the period.What is the total interest paid during the 4 year period?(10 Marks)Whenever the returns from the individual securities are not perfectly positively correlated,the risk of any portfolio of these securities may be reduced through the effects ofdiversification" Do you agree? Explain.(06 Marks)Assume that stock A had an average return of 11.3 with a standard deviation of 20.79.Stock B had an average return of 10.3 with a standard deviation of 18.70. The correlationbetween the returns of the two stocks is 0.88.a)If you are risk averse, would you prefer to invest all in Stock A, all in Stock B, orin the portfolio? Why?(08 Marks)

(10 Ma (05 Ma What are the functions of Management Accounting? Explain. 'Cost Accounting is an aid to Management Accounting" Discuss. Explain the difference between Cost Accounting and Management Accounting. (05

(10 Ma (05 Ma What are the functions of Management Accounting? Explain. 'Cost Accounting is an aid to Management Accounting" Discuss. Explain the difference between Cost Accounting and Management Accounting. (05

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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