Swarnarik Chatterjee 23405018005 CA2 Management Accounting
Swarnarik Chatterjee 23405018005 CA2 Management Accounting
ACCOUNTING
CA 2
3. Fixed cost RS. 10,000, P/V Ratio 50% Break Even Sales will be?
¿ Cost
Ans: Break Even Sales¿ pv ratio
10,000
¿
50 %
¿ Rs .20,000 (b)
6. Production Budget is a.
7. The difference between actual cost and standard cost is known as.
Ans: (a) Variance
8. The current Ratio of a firm is 5;3. It,s net working capital is Rs20,000.
The value of it,s crrent assets will be.
≫3CA=5CL
5CL
≫CA=
3
CA-CL=WC
5 cl
¿ −¿CL=20,000
3
5CL−3 CL
= 3
=20,000
=2CL=60,000
CL=30,000
Here,
Working Capital=RS.20,000
Current Liabilities=Rs.30,000
current Assets 5
Current Ratio= Current Liabilities = 3
x 5
= 30,000 = 3
=3x=1,50,000
= Rs. 50,000(b)
Answer:
PREPARING BUDGET:
The annual budget should be created by consulting all the departments and not
only just the accounting department as each department requires their own
budget. For example, from the manufacturing team, you can get information on
the cost involved in the delivery of goods and purchases of materials and the
sales team can give you the revenue assessment details.
A good way to avoid unnecessary expenses is to research the costs that will be
involved such as rent, salaries, interest costs, phone and other utilities costs,
marketing cost and so on. This process will help the business holders to make
informed decision regarding the organisation and will help them prepare for any
As you determine how much money you will be needing you should also
estimate how much revenue you may generate. If you already have information
about the previous year’s revenue you can easily use it as a baseline for the
revenue forecast for this year. Create an estimation of all your funding
resources. Discuss with your sales department how much revenue are they
expecting. Know what your customers are expecting from your products and
services. You may also consider your recent monthly growth and make
estimations about revenues from that.
Make an estimate of how much money is left with you after paying all the
expenses. This is what is stated as gross margin profit. Start with making a list
all the sales. Then subtract the revenue costs from that. Consider the same
process department wise and overall. This will give you a clear picture of how
the money is being utilized by every department and where is the scope of
A cash flow plan can help you identify when and how much your company
should spend. It is a must for businesses that are seasonal as then you will have
an idea how to manage your expenses in the offseason. Cash flow plan is
and how. With this information, you can easily create a budget and estimate
If you want to maintain the annual budget then you should keep a check of how
you are spending money. Make sure you are spending money on the things that
help your business in growing further. The best way to monitor this is by having
a spending strategy for your business. For example, decide if you want to buy or
rent the office and the technology or keep a check of the old products before
you buy any new ones for your office.
Q.2: What do you mean by standard costing? How does it differ from
budgetary control?
Answer:
Fixing Standards
The following are the major differences between standard costing and budgetary
control:
Answer:
(1) Planning:
Planning is formulating short term and long-term plans and actions to achieve a
particular end. A budget is the financial planning showing how resources are to
be acquired and used over a specified time interval.
(2) Organising:
(3) Controlling: