Download third assignment

FIRST ASSIGNMENT
Course Code
Course Title
Assignment Code
Coverage
:
:
:
:
MS-04
Accounting and Finance for Managers
04/TMA-1/SEM-II/2006
Blocks1, 2 & 3
Note: Please attempt all the questions and send them to the Co-ordinator of the Study
Centre you are attached with.
1.
In your organization or any other organization of your choice try to find out
about the accounting concepts that are being used, whether the accounting
practices are standardized, if so, why. Also write in brief as to how accounting
information helps them in the allocation of resources.
2.
XYZ Ltd. manufactures a product that it sells for Rs.125. The variable cost to
manufacture the product is Rs.70 per unit and the variable cost to market and
distribute the product is Rs.15 per unit. The company has fixed manufacturing
costs of Rs.12,00,000 and fixed selling and administrative costs of Rs.4,00,000.
Management’s current profit objective is to earn Rs.1,20,000 of income. The
new Finance Manager proposed a target income of 15 percent on sales.
You are required to:
a.
b.
c.
3.
Calculate the break-even volume of activity both in units and in rupees.
Calculate the required volume of sales in units and in rupees to earn the
firm’s current target income.
Calculate the required volume of sales in units and in rupees to earn the
Manager’s proposed target profit.
The Financial Statements of a Sugar Company from the 2005 Annual Report are
as follows :
Income Statement for year ended December 31, 2005
______________________________________________________
Sales
Rs.1,000
Cost of goods sold
(650)
Depreciation expense
(100)
Sales and general expense
(100)
Interest expense
(50)
Income tax expense
(40)
__________
Net Income
Rs.60
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Balance Sheets at December 31, 2004 and 2005
_______________________________________________________
2004
2005
Rs
Rs
_______________________________________________________
Assets
Cash
50
60
Accounts receivable
500
520
Inventory
750
770
_______
________
Current assets (net)
1,300
1,350
Fixed assets (net)
500
550
_______
________
Total assets
1, 800
1 ,900
Liabilities and Equity
Notes payable to banks
Accounts payable
Interest payable
Current liabilities
Long-term debt
Deferred income tax
Capital stock
Retained earnings
Total liabilities and equity
100
590
10
________
700
300
300
400
100
________
1,800
75
615
20
________
710
350
310
400
130
________
1, 900
Use the direct method to prepare a statement of cash flows for the year ended
December 31,2005.
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SECOND ASSIGNMENT
Course Code
Course Title
Assignment Code
Coverage
:
:
:
:
MS-04
Accounting and Finance for Managers
04/TMA-2/SEM-II/2006
Blocks 4 & 5
Note: Please attempt all the questions and send them to the Coordinator of the Study
Centre you are attached with.
1.
Select any organization of your choice and discuss the cash management system
in that organization. According to you what are the reasons that have contributed
to the present state of cash management in that organization. Give your views or
suggestions on the prevailing system of cash management in that organization.
2.
“Dividend can be paid only out of profits” Explain this statement and also
discuss your role as a Finance Manager in the matters of dividend policy.
3.
There are two mutually exclusive investment projects under consideration at
Anuja Ltd. Both would involve purchase of machinery with a life of 5 years.
Project 1 would generate annual cash flows (receipts less payments) of
Rs.2,00,000; the machinery would cost Rs.5,56,000 and have a scrap value of
Rs.56,000.
Project 2 would generate annual cash flows of Rs.5,00,000; the machinery would
cost Rs. 16,16,000 and have a scrap value of Rs.4,31,000.
The company uses the straight line method for providing depreciation. Its cost of
capital is 15% per annum. Assume that annual cash flows arise on the
anniversaries of the initial outlay, that there will be no price changes over the
projects life and that acceptance of one of the projects will not alter the required
amount of working capital.
You are required to calculate for each project :
(i)
the accounting rate of return (ratio, over project life, of average
accounting profit to average book value of investment) to nearest 1%.
(ii)
the net present value
(iii)
the internal rate of return to nearest 1%, and
(iv)
the pay back period to one decimal place.
Also state which project you would select giving reasons for your choice. Ignore
taxation.
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THIRD ASSIGNMENT
Course Code
Course Title
Assignment Code
Coverage
:
:
:
:
MS-04
Accounting and Finance for Managers
04/TMA-3/SEM-II/2006
All Blocks
Note: Please attempt all the questions and send them to the Coordinator of the Study
Centre you are attached with.
1.
“Accounting is an information system” Do you agree? Substantiate your answer
with reasons. How does an Accountant help in planning and controlling a large
commercial organization? Explain.
2.
You are required to calculate material variances, labour variances and only total
variance for factory over-head from the information as indicated in the records of
Alpha Engineering Corporation for the month of April, 2005:
Standards
Direct material
Direct labour
Factory overhead
4 gallons @ Rs. 1.20
3 hours @ Rs. 1.80
Rs..60 per labour hour
Total manufacturing cost
Unit Cost
4.80
5.40
1.80
--------12.00
---------
Month of April Activity
(i)
Production during the month of April, 2005 has been 6,500 units with no
beginning or ending work-in-progress inventories.
(ii)
Materials:
Purchased
32,000 gallons @ Rs 1.18 per gallon
Used in production
25,600 gallons
Labour:
Hours worked
20,000
Average hourly wage rate
Rs.1.75
Factory overhead
Total overhead cost incurred
Rs.12,500
(iii)
(iv)
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3.
You are required to prepare the cash budget for April-Oct. 2006 from the
information relating to ABC Agencies, a trading concern:-
Balance Sheet as on 31st March, 2006
Liabilities
Rs.
Assets
Rs.
Proprietor’s Capital
1,00,000
Cash
20,500
Outstanding Liabilities
17,000
Stock
50,500
Sundry debtors
26,000
Furniture
25,000
Dep.
-5,000 20,000
--------------------1,17,000
1,17,000
----------------------_______________________________________________________________________
Sales and salaries for different months are expected to be as under:
Months
April
May
June
July
August
September
October
Sales
80,000
52,000
50,000
75,000
90,000
35,000
25,000
Salaries
3,000
2,500
35,000
4,000
4,000
3,000
3,000
The other expenses per month are: Rent Rs.1,000, Depreciation Rs.1,000, Misc. Expenses
Rs.500 and Commission 1% of sales.
Of the sales, 80% is on credit and 20% for cash. 70% of the credit sales are collected in
one month and the balance in two months. Debtors on March 31, 2006 represents
Rs.6,000 in respect of sales of February and Rs.20,000 in respect of sales of March.
There are no debt losses. Gross profit on sales on an average is 30%. Purchases equal to
the next month’s sales are made every month and they are paid during the month in
which they are made. The firm maintains a minimum cash balance of Rs.10,000. Cash
deficiencies are made up with bank loans which are repaid at the earliest available
opportunity and cash in excess of Rs.15,000 is invested in securities (Interest on bank
loans and securities is to be ignored). Outstanding liabilities remain unchanged.
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