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MANAGEMENT INFORMATION

Time allowed 1 hours


Total Marks 100

[N.B. The figures in the margin indicate full marks. Question must be answered in English. Examiner will take account
of the quality of language and of the way in which the answers are presented. Different parts, if any, of the same
question must be answered in one place in order of sequence.]

Marks
1. (a) Define cost object and cost unit. 4
(b) Give at least two examples of cost object and cost unit. 4



2. (a) Describe the advantages and disadvantages of the LIFO method.

4
(b) ABC Company buys and sells cartoon boxes. Opening inventory was 500 boxes valued at
Tk 1,000. The transactions for latest quarter are shown below:

July
2013
August
2013
September
2013

Purchase : No. of boxes 2,000 2,400 2,000
Taka 5,000 6,240 5,400


Sales : No. of boxes 2,200 1,800 1,600

Selling price was Tk 3 per cartoon box throughout the quarter. Determine value of
closing inventory and gross profit at 30-09-2013 using periodic weighted average price
and FIFO method.



5+5
3.

Product Y incurs direct variable production costs of BDT 6 per unit. Fixed production
costs amount to BDT 19,000 each period.
Variable selling and distribution costs are BDT 4.50 per unit and fixed selling,
distribution and administration costs amount to BDT 22,500 each period.
Selling prices are determined on a marginal cost-plus basis, using a mark-up of 25% of
the marginal cost of sales.
Calculate the selling price per unit of product Y and the profit that will result from sales
of 30,000 units each period.






10
4. (a) Describe the problems with traditional absorption costing.

3
(b) SenjutiKites Ltd. (SKL) produces and markets specialized kite. SKL follows a standard costing
system and its standard cost card is as follows:

Standard cost card Taka
Sales Price 80
Direct Material 11
Direct Labour 19
Variable Overheads 8

Budgeted data for September, 2013
Production in unit 20,000
Fixed production overhead Tk100,000
Fixed administration expenses Tk36,000
Fixed selling expenses Tk22,000
Variable selling expenses 5% of sales

The actual data in unit for September, 2013 is as follows:


Production Sales
September, 2013 20,000 15,000


The opening inventory for the month of September, 2013 is 1000 units.


With the help of the above information, calculate the profit of SKL under marginal
costing and absorption costing for September, 2013.
10
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2

5. (a) Describe the features of effective feedback.

3
(b) Nicholson sells mobile telephones. The company has employed you as a consultant to
install a balanced scorecard system of performance measurement and to benchmark the
results. The financial and operating data for the year ended 31 December 201X is available:


Taka 000
Sales revenue 480
Sales attributable to new products 8
Average capital employed 192
Profit before interest and tax 48
Plant and machinery 13,200
Inventory 1,200
Trade creditors 1,400
Debtors 1,400
Cash 500

Calculate the following performance ratios:
(i) Return on Capital Employed 3
(ii) Return on Sales 3
(iii) Asset Turnover 3
(iv) Current Ratio 3

6. You have two potential projects in hand. Projects are mutually exclusive. You have
the following information about the projects:




Year Cash flow of Project A Cash flow of Project B

0 (500,000) (500,000)
1 125,000 200,000
2 175,000 200,000
3 200,000 200,000
4 250,000 200,000
5 250,000 200,000
500,000 500,000

The cost of capital is 15%.


You are required to:
(a) Calculate Net Present Value (NPV) for both the projects. 5
(b) Calculate Internal Rate of Return (IRR) for both the projects. 5
(c) Which project will you choose considering NPV and IRR? 5

7. (a)Whatisflexiblebudget?Describetwoadvantagesofflexiblebudget? 6
(b) Prepare a budget for 20X6 for the variable direct labour costs and overhead expenses of a
production department flexed at the activity levels of 80%, 90% and 100%, using the
informationlistedbelow. 14
(i) ThevariabledirectlabourhourlyrateisexpectedtobeBDT7.50
(ii) 100%activityrepresents60,000directlabourhours
(iii) Variablecosts:
Indirectlabour BDT0.75perdirectlabourhour
Consumablesupplies BDT0.375perdirectlabourhour
Canteenandotherwelfareservices6%ofdirectandindirectlabourcosts
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(iv) Semivariablecostsareexpectedtorelatetothedirectlabourhoursinthesamemanneras
forthelastfiveyears:

Year DirectLabour(hours) Semivariablecost

20X1 64,000 20,800


20X2 59,000 19,800
20X3 53,000 18,600
20X4 49,000 17,800
20X5 40,000(estimate) 16,000(estimate)

(v) FixedCost:
Depreciation 18,000
Maintenance 10,000
Insurance 4,000
Rates 15,000
ManagementSalaries 25,000

(vi) Inflationistobeignored.

(c) Calculatethebudgetedcostallowance(ieexpectedexpenditure)for20X6assumingthat57,000
directlabourhoursareworked. 5






The End

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