KSLU Solved Question Papers
Cost and Management Accounting
Previous Year Question Paper with Solution
B.B.A. LL.B. (Five Years) · Sem 3
2023 Mar Examination
munotes.in
Mumbai
B.B.A. LL.B. (Five Years) Sem 3 Cost and Management Accounting 2023 Mar Question Paper with Solutions
First published on munotes.in on 1 November 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2023 Mar examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2023 Mar examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2023 Mar examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short note/problems is compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written in English completely. (5) Use simple calculator only.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)What is Budgetary Control ? Explain the advantages and disadvantages of Budgetary Control.[10]
Answer
For full marks, cover: the meaning of budgetary control and its three essentials; its main features; the merits, grouped by who gains (management, the business as a whole, the workers); the demerits; a table; and a conclusion.
Meaning of budgetary control
Budgetary control is the use of budgets to run a business. Management first fixes, in figures, what each department should achieve and spend in the coming period. As the period passes, the actual results are recorded and set against these figures. Where they differ, the reasons are found and put right.
So budgetary control has three essentials:
- Budgets are prepared for each function and each responsible manager.
- Actual results are compared with the budgets regularly, not just once a year.
- Action follows the comparison. Either the performance is corrected, or the budget is revised if conditions have changed.
Features
- It is a system of planning and control together.
- It fixes responsibility on named managers for named budgets.
- It works through variances, the differences between budget and actual.
- It rests on management by exception: only significant variances are reported upwards.
- It needs a budget committee, a budget officer and a budget manual.
Merits of budgetary control
Merits for management
- Clear goals. Each manager knows the target for sales, output or cost.
- Early warning. Monthly comparison shows problems before they grow.
- Better decisions. Budgets show the likely effect of a change in price, wages or volume.
- Less routine checking. Managers attend only to the large variances.
Merits for the business as a whole
- Co-ordination. Sales, production, purchase and finance work to one plan.
- Economy. Spending is controlled and waste is cut.
- Sound finance. The cash budget shows when money is needed, so loans are arranged in time.
- Best use of resources. Materials, machines and men are planned in advance and kept busy.
- Credit standing. Lenders trust a business that plans in figures.
Merits for the workers
- Clear standards of performance, known in advance.
- Recognition and reward when targets are met, through incentive schemes linked to budgets.
- Participation. Where managers and staff help to set the budget, they feel part of the plan.
Demerits of budgetary control
- Uncertain estimates. Budgets rest on forecasts of sales, prices and costs. A wrong forecast makes the whole budget unreliable.
- Out of date quickly. Sudden changes in demand, prices or policy make a budget stale. Revising it often costs time.
- Rigidity. Managers may refuse a sensible expense because it is not in the budget, or spend the whole allowance to keep it for next year.
- Padding. Managers may set easy targets or ask for more money than they need. Such hidden margins are called budgetary slack.
- Expense. A budget committee, budget staff and regular reports cost money. Small firms may not afford a full system.
- Pressure on staff. Targets imposed from above cause resentment, and failure to meet them may be blamed unfairly.
- No substitute for management. A budget only shows the difference. Managers must still decide and act.
Merits and demerits compared
| Aspect | Merit | Demerit |
|---|---|---|
| Planning | Clear goals and early warning | Built on forecasts that may fail |
| Control | Waste cut, responsibility fixed | Variances shown but not corrected by themselves |
| People | Clear standards and recognition | Pressure, resentment and padding |
| Aspect | Merit | Demerit |
|---|---|---|
| Cost | Economy in spending | The system itself is costly |
| Flexibility | Basis for revising plans | Rigid budgets block useful spending |
A short illustration
A sales department is budgeted to sell 2,000 units in a quarter at 500 rupees each, with selling expenses of 60,000 rupees. It actually sells 1,800 units at 500 rupees and spends 66,000 rupees.
| Item | Budget (Rs) | Actual (Rs) | Variance (Rs) |
|---|---|---|---|
| Sales | 10,00,000 | 9,00,000 | 1,00,000 (A) |
| Selling expenses | 60,000 | 66,000 | 6,000 (A) |
Sales fell short by 10,00,000 - 9,00,000 = 1,00,000 rupees, while spending rose by 66,000 - 60,000 = 6,000 rupees. The sales manager must explain both. Perhaps a rival cut prices, or the extra advertising came too late. Without the budget, nobody would have a figure to measure the quarter against.
Making the merits outweigh the demerits
The demerits are reduced when budgets are realistic, prepared with the people who must meet them, and revised when conditions change. Flexible budgets remove the unfair comparison of actual cost with a budget for a different output. Top management must take the reports seriously and act on them. Reports must also reach managers quickly, in simple form, while there is still time to correct the month's results. A clear budget manual, a fair key factor and a realistic budget period complete the essentials of success.
Conclusion. Budgetary control means preparing budgets, comparing actual results with them and acting on the differences. It helps management plan, co-ordinate and control, and it gives workers clear standards. Its weaknesses come from uncertain forecasts, rigidity, padding and cost. With realistic, flexible and participative budgets, its merits clearly outweigh its demerits.
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