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CS54 : FINANCE & ACCOUNTING ON COMPUTERS

DEC 2003

 

Note : There are 6 questions in this paper. Question no. 1 is compulsory and carries 30 marks. From the remaining, attempt any three questions. Each of these carries 15 marks.

 

 

1(a) In about one short paragraph, explain the meaning of the following words or phrases:                                              [10]

(i) Cost Accounting

(ii) Current Assets

(iii) Differential Costs

(iv) Profit/Volume Ratio

(b) What role is a management accountant required to play in the current business  scenario?                                         [10]

(c) What is a Profit and Loss Statement and what information does it provide?                                                               [10]

 

2 Mr. Ramchandra has developed a revolutionary new computerised method of preparing tax returns for individuals. He has a choice of computers on which to instal his new process. Under Plan A he would lease a computer for Rs. 5 lakhs per year and process returns with a variable cost of Rs. 2 per return. Under Plan B, he would lease a smaller, less efficient computer for Rs. one lakh per year, but processing costs under Plan B will be Rs. 12 per return. Under either process, Mr. Ramchandra would charge Rs. 22 per return processed.

Answer the following questions on the basis of the above information:

(i) Which plan has a higher degree of operating leverage?

(ii) Construct break-even charts of the two plans.

(iii) Which plan is more risky?

(iv) At what volume of tax returns would Mr. Ramchandra have the same operating Profit under either plan?                  [15]

 

3 You are required to calculate the various labour variances from the details regarding composition, and the weekly wage rate of labour force engaged on a job scheduled to be completed in 30 weeks as given below:

 

                                            

 

4 Discuss the concepts of performance budgeting and zero-base budgeting. How can computers be helpful in this respect?                                                                                                                                                                       [15]

 

5 What are the features of an appropriate capital structure? How is the concept of cost of capital relevant in it?              [15]

 

6 (a) Narrate the importance of working capital management.

(b) Give a format of Funds Flow Statement, with imaginary figure.                                                                                [15]

 

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