| 2. | (a) | "Change has become inevitable in the dynamic business world of today. Employees in the organization often tend to vehemently resist the change for various reasons" | (i) | List some of the most important reasons for resistance to change. | | (ii) | Suggest measures, which could be used to overcome such a resistance. |
| 4+4 | (0) |
| | (b) | Briefly state the salient features of 'Management'. | 8 | (0) |
| 3. | (a) | "Profitability alone cannot be the sole criteria for measuring the performance of any public undertaking." —
Comment on this statement. | 4 | (0) |
| | (b) | The Pupit‘s Book Co. has two book selling outlets: Kalidas Book House and Tulsidas Book House. Each store has a manager who has a great deal of decision authority over the individual stores. A central office however, handles advertising, marketing research, acquisition of books, legal services, and other staff functions. The Pubil‘s Book Co‘s current accounting system allocates all costs to the stores. Results for 2002–03 were. | Amount in Rs. | | Item | Tota
Company | Kalidas Book
House | Tulsidas
Book House | | Sales Revenue | 7,00,000 | 3,50,000 | 3,50,000 | | Cost of merchandise sold | 4,50,000 | 2,25,000 | 2,25,000 | | Gross Margin | 2,50,000 | 1,25,000 | 1,25,000 | | Operating Expenses: | | Salaries and Wages | 63,000 | 30,000 | 33,000 | | Supplies | 45,000 | 22,500 | 22,500 | | Rent and Utilities | 60,000 | 40,000 | 20,000 | | Depreciation | 15,000 | 7,000 | 8,000 | | Allocated staff cost | 60,000 | 30,000 | 30,000 | | Total operating expenses | 2,43,000 | 1,29,500 | 1,13,500 | | Operating income (Loss) | 7,000 | (4,500) | 11,500 |
Each bookstore manager makes decisions that effect salaries and wages, supplies and depreciation. In contrast, rent and utilities are beyond the managers‘ control because the managers did not choose the location or size of the store. Supplies are variable costs. Variable salaries and wages are equal to 8% of the cost of merchandise sold; the remainder of salaries and wages is a fixed cost. Rent, utilities, and depreciation are also fixed costs. Allocated staff costs are unaffected by any events at the bookstores, but they are allocated as a proportion of sales revenue.
Required | (i) | Using the contribution approach, prepare a Performance report that distinguishes the performance of each bookstore from that of the bookstore manager. |
| (ii) | Evaluate the performance of each bookstore. |
| (iii) | Evaluate the performance of each manager. |
| 6+3+3 | (0) |
| 4. | (a) | Great Eastern Enterprises which makes only one product, sells 1,00,000 units of its product making a loss of Rs. 1,00,000. The variable cost per unit of the product is Rs. 8 and the fixed cost is Rs. 3,00,000. The company has estimated its sale demand as follows: Sales Unit
1,00,000
120,000
140,000
160,000
180,000 | Probability
0.10
0.15
0.20
0.30
0.25 |
| (i) | What is the probability that company will continue to make losses? |
| (ii) | What is the probability that the company will make a profit of least Rs. 60,000? |
| 3+3 | (0) |
| | (b) | In relation to linear programming explain "Dual Problem". | 5 | (0) |
| | (c) | In a factory three products A, B and C are produced. There is the possibility of applying two strategies — produce all the three items or any two of them. Products A and C pass through shops I and II where as B is further processed in shop III. Each has limited available hours. Hours available in shops I, II and III are 162 hours, 189 hours and 5 hours respectively. Profit per unit of A, B and C is Rs. 27 Rs. 29 and Rs. 25 respectively. The following table gives the processing time of different items in different shops. | Shops | Items |
I
II
III | A
27
27
0 | B
12
25
3 | C
12
25
0 |
Formulate the problem as a linear programming model to maximize total profit. You are not required to solve the problem. | 5 | (0) |
| 5. | (a) | Customers arrive a window drive in a bank according to poisson distribution with mean 10 per hour. Service time per customer is exponential with mean 5 minutes. The space in front of the window including that for the serviced car, can accommodate a maximum of three cars. Other cars can wait outside this space. | (i) | What is the probability that an arriving customer can drive directly to the space in front of the window? |
| (ii) | What is the probability that an arriving customer will have to wait outside the indicated space? |
| (iii) | How long is an arriving customer expected to wait before servicing? |
| 2+2
+2=6 | (0) |
| | (b) | Ramu and Raju are worked on a two – stations assembly line. The distribution of activity times at their stations are as given below: Time
(sec) | Time frequency for Ramu
(sec) | Time frequency for Ramu
(sec) | Time frequency for Raju
(sec) 10
20
30
40
50
60
70
80 | 4
6
10
20
40
11
5
4 | 4
5
6
7
10
8
6
4 |
Use the random number given below: Operation 1
Operation 2 | 14,
36, | 01,
76, | 94,
55, | 44,
25, | 61,
97 | 82,
41, | 00,
16, | 03,
34, |
| (i) | Simulate operation of the line for eight times, using the random nos; as given. |
| (ii) | Assume that Raju must wait untill Ramu completes the first item before starting work, will he have to wait to process any of the other eight items? |
| 8+2=10 | (0) |
| 6. | (a) | A company manufactures two products X and Y. A forecast of unit to be sold in the first 4 months of the year is given below: Months
January
February
March
April
May | Product X
1000
1200
1600
2000
2400 | Product Y
2800
2800
2400
2000
1600 |
Other information are as follows: Cost per unit (Rs.)
Direct Material
Direct Labour
Factory overhead/unit | Product X
12.50
4.50
3.00 | Product Y
19.00
7.00
4.00 |
There will be no opening and closing work-in-progress (WIP) at the end of any month and finished product (in units) is equal to half of the budgeted sale of the next month should be in stock at the end of each month (including previous year December)
You are required to prepare:
(i) Production Budget for the period January to April, and
(ii) Summarized Production Cost Budget. | 4+4=8 | (0) |
| | (b) | The cost of an article at a capacity level of 5,000 units is given in the table below under Column A. For a variation of 25% in capacity above or below this level, the individual expenses vary, as indicated in column B. | A
(Rs.) | B
(Rs.) | Material cost
Labour cost
Power
Repairs and maintenance
Stores
Inspection
Administration overheads
Selling overheads
Depreciation
Total
Cost per unit | 25,000
15,000
1,250
2,000
1,000
500
5,000
3,000
10,000
62,750
12.55 | 100% variable
100% variable
80% semi–variable
75% semi–variable
100% variable
20% semi–variable
25% semi–variable
50% semi–variable
100% fixed |
You are required to prepare the production cost Budget (flexible) at 4000 units and 6000 units. | | (0) |
| 7. | (a) | A cost accountant of a company was given the following information regarding the fixed overheads for March, 2003: | (i) | Overheads cost variance Rs. 2,800 adverse; | | (ii) | Overheads volume variance Rs. 2,000 adverse; | | (iii) | Budgeted hours for March, 2003 Rs. 2,400 hours; | | (iv) | Budgeted overheads for March, 2003, Rs. 12,000; | | (v) | Actual rate of recovery of overheads Rs. 16 per hour. | | You are required to assist him in computing the following for March 2003: |
| (1) | Overheads Expenditure variance; | | (2) | Actual overhead incurred; | | (3) | Actual hours for actual production; | | (4) | Overhead capacity variance; | | (5) | Overheads efficiency variance; | | (6) | Standard hours for actual production. |
| 9 | (0) |
| | (b) | S Ltd. has been operating a new manufacturing process for about five months and the manager estimates that there is a 90% chance the process is currently operating in an in–control state. The process is such that if it is in an in–control or an out of control state–it–will not change without some form of intervention.
If the process is investigated the cost of the investigation is estimated to be Rs. 2,000 and if a correction is necessary the cost of correction will be an additional Rs. 1,000. If the process is allowed to operate is an out–of–control state the incremental cost is expected to be Rs. 11,000 over the planning horizon.
Calculate the probability of the process being out–of–control that would make management indifferent between investigating and not investigating the process, Calculate the expected cost of each action. | 7 | (0) |
| 8. | Write short notes on any four from the following: | 4x4=16 | |
| | (a) | Activity based budgeting; | | (0) |
| | (b) | Value analysis; | | (0) |
| | (c) | The new management revolution; | | (0) |
| | (d) | Performance budgeting; | | (0) |
| | (e) | Responsibility accounting. | | (0) |
