MANAGEMENT ACCOUNTING (BAAC2204)

ASSIGNMENT

MANAGEMENT ACCOUNTING 1 (BAAC2204)

[3 x 5 = 15 Marks]

Name: ___________________________________________________________

ID No: ___________________________________

Instructions:

1. Last date of submission is 04.2021 (Saturday)
2. Assignment should be submitted on or before specified date, any delay will result in deduction of marks.
3. Solve all the questions on a white paper with your own handwriting with required working notes and then paste the photo/images of solutions on a word file. Save the word file with your ID and Submit it through e-learning. The link name is MAC 1 Assignment Semester 2, 2020-21

QUESTION 1

Muscat Electronics Company is in the business of buying and selling of different types of electronical products in different region of Oman and provided the following data to understand the cash position every month start from January to July, 2021.  The sales book reported the sales amount for seven months as below:-

January	February	March	April	May	June	July
30,000	28,000	32,000	32,800	34,600	26,800	32,400

 

The sales reported every month including cash sales and credit sales. Cash sales constitute 40% of total sales collected in the month of sales and the balance is credit sales received in the month following the month of actual sales.

The detail of goods purchased in cash during seven months reported in purchase book as below: –

January	February	March	April	May	June	July
4,000	3,500	3,600	4,200	4,800	4,400	3,800

 

Company also purchased goods on credit from different suppliers. The detail of credit purchase from the month January to July is given below: –

January	February	March	April	May	June	July
12,000	11,000	13,200	14,400	15,800	9,800	13,600

 

Cash purchases payable in the month of purchases and credit purchases are payable to supplier in two months following the month of credit purchase.

It is also found from the accounting records that the company purchased plant and equipment for RO 9,000 in the month of March and it is payable in three equal instalments starting from April. Tax department has sent a notice to the company to pay taxes of RO 2,000 each in the month of May and June.

The wages and office expenses are paid in the month following the month in which wages and office expenses incurred. The detail of wages and office expenses is given below: –

	January	February	March	April	May	June	July
Wages	2,000	2,250	2,750	2,780	1,900	1,600	2,800
Office Expenses	1,500	1,200	1,400	1,300	1,100	900	2,000

 

The selling expenses of the company recorded for the seven months are as follows: –

January	February	March	April	May	June	July
650	850	750	650	680	550	850

 

The company also incurred administrative expenses for the period January to July. The detail of administrative expenses is given as below: –

January	February	March	April	May	June	July
700	800	900	1,000	1,100	1,200	1,300

 

The company is paying the selling and administration expenses in one months following the month in which such expenses incurred.

The cash balance as on 1^st January is RO 15,500.

Requirement: The Company has requested you to prepare Cash budget for the period of six month (January to June).                                                                                               [5 Marks]

 

QUESTION 2

MHM Manufacturing Company is currently engaged in the production of three products; A, B and C. These products use the same raw materials, though the consumption of quantity differs. Details of quantity required to each product in terms unit and labour hours provided as below:

	A	B	C
Direct Material (Units consumed)	2	3	4
Direct Labour (No. of hours)	2	3	2

 

Direct materials cost RO 3.2 per unit while the direct labour costs are RO 2.5 per hour.

For many years, the company has been using absorption costing for allocating overheads. The basis of allocation used was the total labour hours.

The budgeted production of these products are given below

	A	B	C
Budgeted Production	5,000	6,000	10,000

 

Details of overhead are given below.

	Total
Machine Set Up Costs	25,000
Procurement expenses	30,000
Machine running costs	55,000
After Sales Support	20,000

 

Details of the cost drivers are given below;

	A	B	C
No. of machine set up	40	30	30
No. of purchase orders	300	400	300
Machine hours per unit	2	4	6
No. of visits to the customer	100	150	50

 

You are required to calculate: –

1. Cost per unit for each product using Absorption costing
2. Cost per unit for each product using ABC
3. Identify products for which under costing and/or over costing is observed.        [5 Marks]

 

 

QUESTION 3

The following information furnished by Al Naba Manufacturing for measuring financial performance by calculating the ratios. The list of assets, equity and liability is given below:-

 

Assets	Amount (OMR)
Land and Building	500,000
Plant and Equipment	300,000
Furniture and Fitting	50,000
Inventories	150,000
Accounts and other receivables	75,000
Cash	15,000
Bank	55,000
Equity & Liabilities
Equity Share Capital	400,000
Bonds Payable	100,000
Accounts Payable	120,000
Outstanding expenses	10,000
Short term Bank borrowing	80,000

 

The list of Income statement items is given below:-

	Amount (OMR)
Sales	750,000
Cost of goods sold	400,000
General and Administrative Expenses	55,000
Selling and Marketing Expenses	25,000
Depreciation Expenses	30,000
Interest Expenses	20,000
Taxes	30,000

 

Additional Information:

1. Dividend paid by the company in the year 2020 is RO 15,000
2. The face value of each share is RO 0.300
3. The market price of shares at end 2020 is RO 0.600

Requirement: You are required to calculate: –                                                                [5 Marks]

1. Earnings per share
2. Interest cover
3. Dividend cover
4. Price/Earnings ratio
5. Gross Profit Margin Ratio
6. Operating profit Ratio
7. Return on Assets
8. Return on Working Capital Ratio
9. Current Ratio
10. Quick Ratio

 

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