CWA/ICWA Final :: Operations and Project Management and Control : June 2007

*F-13(OPM)* *Revised Syllabus*
Time Allowed : 3 Hours		Full Marks : 100
The figures in the margin on the right side indicate full marks
Answer Question No. 1 & Question No. 7, which are compulsory and any two other questions from Section I and any two other from Section II.
Please answer all the bits of a question at one place.
Section I
Marks

(a)

Match each item in the left hand Column-1 with an appropriate item in the right hand column-II:

Column I		Column II
(A)	Picking	(i)	Heat Treatment
(B)	Broaching	(ii)	Metal Joining
(C)	Brazing	(iii)	Machining
(D)	Extrusion	(iv)	Metal Forming
(E)	Annealing	(v)	Surface Treatment

1x5

(b)

Explain the following acronyms:

(i)

FMS

(ii)

MTM

(iii)

CRM

(iv)

ERP

(v)

AQL

1x5

(c)

In each of the cases given below one out of four answers is correct. Indicate the correct answer and give your workings/reasons briefly:

(i)

The deviations of work centre time and cycle time for five work centres on an assembly line are 0, 10, 10, 10 and 40 minutes. Smoothness Index will be

(a)

1900

(b)

(c)

43.59

(d)

8.37

(ii)

The expected (observed) time a worker will take to produce a part for which standard time is 10 minutes, if the allowance of this work is 25% of the normal time and the worker is rated at 80%.

(a)

6 minutes

(b)

8 minutes

(c)

10 minutes

(d)

15 minutes

(iii)

A component is made from 2 parts A and B whose dimension and tolerances are 0.600 ± 0.001 and 0.750 ± 0.002. The dimension and tolerance of the component will be

(a)

1.350 ± 0.015

(b)

1.350 ± 0.003

(c)

1.350 ± 0.0015

(d)

None of the above

2x3

(d)

Distinguish between (only two points each):

(i)	Conveyor and Elevator;
(ii)	Quality Control and Inspection.

2x2

(a)

Mention the factors that are normally covered in the choice of Appropriate Technology.

(b)

Smith Engineering Ltd. (SEL) produced one type of mild steel pins for supply to a pump manufacturer. The pins have a miameter of 1 cm and length of 5 cms. The pins are manufactured in lathes by turning and facing from mild steel forged and annealed rods supplied by two firms A and B who supplies the material in following shape and size:

Firm A:	1.2 cms diameter and 6 cms length in forged and annealed condition at a rate of Rs. 160 per piece.
Firm B:	1.4 cms diameter and 7 cms length in forged condition only at a rate of Rs. 145 per piece.

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( 2 )

F-13(OPM)
Revised syllabus

Marks

The company (SEL) can do annealing of the forged rods supplied by Firm B in its own heat treatment shop at a cost of Rs. 10.00 per rod on an average. Weight of mild steel is 7.8 gms per cubic centimeter and machining cost for forged and annealed mild steel is Rs. 300.00 per kg. of metal removal. Asuming that scrap value of chips is negligible. As a Cost Accountant which firm will you choose?

(a)

A factory has three departments X, Y and Z to manufacture two products A and B. Department 'X' can produce parts for 7000 units of A or parts for 12000 units of B per week, but cannot do both at the same time though parts for some A and for some B can be produced. Similarly Department 'Y' can produce 9000 parts for A or 6000 parts for B or combinations in between.

Final assembly is undertaken in department 'Z' with separate assembly lines for A and B with maximum capacities by 6000 and 4000 units respectively. Both lines can be operated at the same time. What is the Optimal Product Mix?

(b)

A radial bearing manufacturing units produces three types of bearing namely X, Y and Z during the year 2006-2007, the unit manufactured 20000; 10000 and 13650 Nos. of X, Y and Z respectively. The standard Man-hours (SMH) of X, Y and Z are 12, 14 and 16 respectively. The unit worked for 8 hours per day for single shift for Monday to Friday and 4 hours shift on saturday. There were 50 working weeks during the year. The ratio of piece workers to Day workers among Industrial employees was 1:0.4 and total No. of Industrial employees was 560. Assuming on an average 15% absenteeism among Industrial employees, what was the productivity of piece workers during the year 2006-2007?

(a)

What are the objectives of using Control Charts for Variables?

(b)

20 samples were obtained from the fabric being produced by a weaving machine. The number of defects per 100 metres of cloth for the samples is given below:

15
12

13
13

14
13

12
12

17
15

14
14

13
14

16
17

16
16

15
15

(i)	Determine the Control Chart limits for the machines;
(ii)	On a particular day when the machine is operating under controlled conditions, 10 samples were drawn and the defects per 100 metres of cloth are as follows:

What conclusions would you draw from these observations?

4+7

(a)

Detail the steps involved in making a work sampling study

(b)

HIPROD CO LTD manufactures three different items of tools. The time required to produce each tool on different operations is as follows:

Operations Time minutes

Drills Cutters Reamers

Turning
Grinding
Milling
Heat treating 16
10
4
3 34
8
5
3 40
17
8
3

Other data available:
Sales per annum (units)
Opening stock (units)
Closing stock (units)
18000
5000
2000
20000
6000
3000
15000
—
4000

The workers are trained in each trade as such their services are not inter-changeable. they are paid at Rs. 11.00 per hour. The workers are paid for 2500 hours per annum which includes 200 hours for leave in which time substitute operators are appointed and for 300 hours the machines are taken for overhaul. Using the above data calculate:

(i) The production quantity;

(ii) No. of operators required per annum; and

(iii) Annual direct labour cost on each type of tool.

2+5+2

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( 3 )

F-13(OPM)
Revised syllabus

Marks

Write short notes on the following:

(a)	Renewal Theory;
(b)	Appropriate Technology
(c)	Powder Metallurgy;
(d)	Cost of Quality.

4+4+4+3

Section II

(a)

Expand the following acronyms:

(i)

MTBF

(ii)

IIBI

(iii)

FDI

(iv)

BOOT

(v)

LRC

1x5

(b)

Fill up the blanks in the following sentences:

(i)	Total float of an ________ is the amount of time an activity of a Project can be delayed without affecting the overall ________ of the Project.
(ii)	Benefit Cost Ratio is the ratio of ________ Value of Benefits to Present ________ of Investments.
(iii)	Head Slack is the difference between the ________ and the ________ Occurrence Times of the Head Event of an Activity.
(iv)	Capital Ratio is the ________ of ________ Ratio.
(v)	Detailed ________ Report is prepared ________ the Feasibility Report.

1x5

(c)

Mention whether the following statements are True or False:

(i)	Social analysis deals with impact of investment in Project on people and their lives.
(ii)	Task Force Organisation Structure is created by sharing authority between the Project Manager and the Functional Manager.
(iii)	In term Rate Contract, the Contractor is paid in lumpsum at the end of Contract.
(iv)	IRR is the discount rate at which the Present Value of future cost inflows equal the Present Value of Project cash outflows/investment.
(v)	Sensitivity Analysis is about estimating the impact of market fluctuations on project profitability.

1x5

(d)

Match the statement in Column-I with the statement under Column-II:

Column I		Column II
(i)	Balancing Project	(A)	Enable to continue in Business and compete effectively
(ii)	Modernization Project	(B)	Are undertaken to maintain Production, at acceptable efficiency level
(iii)	Expansion project	(C)	Seeks profitable investment opportunities, in altogether new areas
(iv)	Diversification Project	(D)	Minimize under-utilization of capacity
(v)	Replacement Project	(E)	Enables enlargement of plant capacity

1x5

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( 4 )

F-13(OPM)
Revised syllabus

Marks

(a)

A manufacturer is considering four locations for establishing a new project. The location specific costs are as follows:

(Costs in rupees)
Item I II III IV

1. Plant & Machinery
2. Taxes per Year
3. Electricity per Year
4. Water per Year
5. Labour per Unit
6. Materials & Equipment per Unit
7. Transportation per Unit 6,00,000
30,000
35,000
8,000
1.00
0.50
0.05 5,00,000
28,000
30,000
7,000
1.50
0.60
0.10 5,50,000
65,000
28,000
7,000
1.10
0.40
0.10 5,00,000
45,000
25,000
6,000
1.75
0.55
0.05

If cost of capital is 10%, determine the most suitable location for volumes of 50,000 units, 1 lakh units and 1.5 lakh units.

(b)

What are the skills and attributes required of a successful Project Manager?

(a)

Xenith Co. has been offered a contract to build and deliver nine extruding presses to the ABC Bottling Co. The contract price negotiated is contingent on meeting a specified delivery time, a bonus being given for early delivery. The marketing department has established the following cost and time information.

Activity Normal Time
(Weeks) Normal Cost
Rs. Crash Time
(Weeks) Crash Cost
Rs.

a b m

1 — 2
2 — 3
2 — 4
2 — 5
3 — 6
4 — 6
5 — 7
6 — 7 1
1
1
5
2
5
4
1 5
7
5
11
6
7
6
5 3
4
3
8
4
6
5
3 15,000
18,000
14,000
15,000
13,000
12,000
20,000
17,000 1
3
2
7
2
4
4
1 19,000
24,000
16,000
16,000
15,000
13,600
24,000
20,600

The normal delivery time is 16 weeks for a contract price of Rs. 1,40,000. Based on the claculated profitability for each of the following specified delivery time, what delivery schedule do you recommend that Zenith Co. may implement?

Contract delivery time (Weeks) Contract Amount (Rs.)

15
14
13
12 1,42,500
1,45,000
1,50,000
1,52,000

(Note: a=t_o: optimistic time b=t_p: pessimistic time m=t_m: most likely time.)

10+2

(b)

What is option clause in a Contract? When it is included in a Contract?

2+1

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( 5 )

F-13(OPM)
Revised syllabus

Marks

10.

(a)

What information would be required for preparing the Projected Balance Sheet of a Company?

(b)

The Balance Sheet of M/s. OPTIMA LIMITED on 31st March 2997 is given below:

Liabilities Assets

Share Capital
Reserves & Surplus
Secured Loans
Unsecured Loans
Current Liabilities
Provisions 100
20
80
50
90
20 Fixed Assets
Investments
Current Assets
Cash
Receivables
Inventories

20
80
80 180
—

180

360 360

The projected Income Statement and the distribution of earnings for the year 2007-08 are as follows:

(Rs. in lakhs)

Sales
Cost of Goods sold
Depreciation
Earnings Before Interest & Tax (EBIT)
Interest
Profit Before Interest & Tax (PBT)
Tax @50%
Profit After Tax (PAT) 400
300
20
80
20
60
30
30

Dividends
Retained Earnings 10
20

An additional outlay of Rs. 30 lakhs is planned for fixed assets in the year 2007-08, which is proposed to be financed by Rs. 20 lakhs of Secured and Rs. 10 lakhs of Unsecured Loans. Further, Secured Loans of Rs. 5 lakhs are also proposed to be discharged. The operations in 2007-08 are expected to increase the stocks by Rs. 10 lakhs and the credit sales by Rs. 15 lakhs. Based on the information given supra you are required to prepare the Projected Cash Flow Statement for the year 2007-08 and the Projected Balance Sheet as on 31st March 2008.

6+6

11.

(a)

A consultant is appointed for a paper project for undertaking certain assignments at a total fee at Rs. 530 lakhs. Terms of payment include 10% advance on the fee and a 5% retention on the progress payments. At a certain point in time, he achieved the following milestones progress against each head of deliverables. What is the overall progress achieved by the consultant and the consulting fee earned by him? What is the amount payable on him at the point of time?

SI.No Assignment deliverables Total
Quantity
(Nos.) Total
Work Value
(Rs. in lakhs) Progress
Achieved
(%)

1.
2.
3.
4.
5.
6 Specifications & Tendering Documents
Tender Evaluation
Work Order Preparation
Detailed Design & Drawings
Review of Vendors' Drawings
Preparations of As Built Drawings 30
30
30
1200
540
600 120
60
30
210
90
20 30
20
15
10
5
0

(b)

A transporter finds from his past records that the costs per year of maintaining a car whose purchase price is Rs. 1,60,000 are as given below:

Year	Maintenance Costs (in Rs.)	Resale Price (in Rs.)
1 2 3 4 5 6 7 8	8,000 9,000 10,500 13,000 15,000 20,000 25,000 30,000	1,45,000 1,32,000 1,22,000 1,14,000 1,09,000 90,000 70,000 50,000

At what age he should replace a Car?

12.

Write short notes on the following:

(a)	Venture Capital Funding of Projects;
(b)	"Invisible Walls" in Project Cost Estimation;
(c)	Zero Based Budgeting (ZBB);
(d)	Consortium Lending.

4+4+4+3

__________

CWA/ICWA Final :: Operations and Project Management & Control : June 2007