| 1. | (a) | Fill in the blanks: | 1x5=5 | |
| | | (i) | Efficiency is basically a ratio of ___________ and ____________ | | (0) |
| | | (ii) | The inclusion of non financial and financial information has become known as the ____________ | | (0) |
| | | (iii) | Queuing theory deals with the analysis of ____________ and ____________ behaviour. | | (0) |
| | | (iv) | A flexible budget recognises the behaviour of ____________ and ____________. | | (0) |
| | | (v) | Profit volume graph shows the relationship between ____________ and ____________. | | (0) |
| | (b) | Match the statement in Column I with that in Column II : | Column I | Column II | | (i) | Cost driver | (a) | Delivers what is required in the
correct place at the correct time. | | (ii) | Value analysis | (b) | Measures the divisional performance. | | (iii) | Material requirement planning | (c) | Purchase order processed. | | (iv) | Residual income | (d) | Shows profitability and capacity utilisation. | | (v) | Performance of public enterprise. | (e) | Promotes innovation and creativity |
| 1x5=5 | (0) |
| | (c) | In the following cases one of the answers is correct, indicate it by the small alphabet (a, b, c or d): | 1x5=5 | |
| | | (i) | In Activity Based Costing, costs are accumulated by | (a) | Cost objects; | | (b) | Cost benefit analysis; | | (c) | Cost pool; | | (d) | None of the above. |
| | (0) |
| | | (ii) | Which of the following assumptions is not related to the accountant's break-even chart? | (a) | Fixed costs remain fixed throughout the range charted; | | (b) | Selling prices do not change; | | (c) | Variable costs fluctuate inversely with volume; | | (d) | Operating efficiency will remain unchanged. |
| | (0) |
| | | (iii) | A product sells for Rs. 8 each with variable cost of Rs. 5 each, Fixed costs are budgeted at Rs. 18,000 or Rs. 2 per unit. The margin of safety is | (a) | 50%; | | (b) | 33 1/3%; | | (c) | 62½%; | | (d) | None of the above. |
| | (0) |
| | | (iv) | AB Ltd. purchased 6,850 kgs of materials for Rs. 21,920. The material price variance was Rs. 1,370 (favourable). The standard price per kg was | (a) | Rs. 3.00; | | (b) | Rs. 3.20; | | (c) | Rs. 3.40; | | (d) | None of the above. |
| | (0) |
| | | (v) | The simulation technique will be useful when | (a) | Problems are complex; | | (b) | A precise solution is required; | | (c) | Problems can't be solved mathematically; | | (d) | None of the above. |
| | (0) |
| | (d) | Define the following terms in not more than two sentences: | 1x5=5 | |
| | | (i) | Target Costing; | | (0) |
| | | (ii) | MRP; | | (0) |
| | | (iii) | Management by objective (MBO); | | (0) |
| | | (iv) | Cost driver; | | (0) |
| | | (v) | TQM. | | (0) |
| 2. | (a) | What is the change of management and what are the factors responsible for change? | 6 | (0) |
| | (b) | A farmer has a 100 acre farm. He can sell all the tomatoes, lettuce or radishes he can raise. The price he can obtain is Rs. 2/kg for tomatoes, Rs. 1.50 a head of lettuce, and Rs. 4/kg for radishes. The average yield per acre is 2,000 kgs of tomatoes, 3,000 heads of lettuce and 1,000 kgs of radishes. Fertilizer is available at Re. 1/kg and the quantity required per acre is 100 kgs each for tomatoes and lettuce and 50 kgs for radishes. Labour required for sowing, cultivating and harvesting per acre is 5 man–days each for tomatoes and radishes and 6 man–days for lettuce. A total of 400 man–days of labour are available at Rs. 40 per man–day.
Formulate this problem as a linear programming model to maximize the Farmer's total profit. You are not required to solve the L.P. model. | 10 | (0) |
| 3. | (a) | What is performance budgeting? What are the stages involved in performance budgeting? | 5 | (0) |
| | (b) | SVT Ltd., a manufacturing company, having a capacity of 6 lakh units has prepared the following cost sheet:
Direct material
Direct wages
Factory overheads
Selling and Adm. overheads
Selling price | Per unit
Rs.
25
10
20
15
90 |
(50% fixed)
(one–third variable)
|
During the year 2003 the sales volume achieved by the company was 5 lakh units. The company has launched an expansion programme, the details of which are as under: | (i) | The capacity will be increased to 10 lakh units. | | (ii) | The additional fixed overheads will amount to Rs. 40 lakhs up to 8 lakh units and will increase by Rs. 20 lakhs more beyond 8 lakh units. | | (iii) | The cost of investment on expansion is Rs. 80 lakhs, which is proposed to be financed through bank borrowings carrying Interest at 15% per annuam. | | (iv) | The average depreciation rate on the new investment is 10% based on straight line method. |
After the expansion is put through, the company has two alternatives for operating expanded plant as under: | (1) | Sales can be increased up to 8 lakh units by spending Rs. 10,00,000 on special advertisement campaign to explore new market; or | | (2) | Sales can be increased to 10 lakh units subject to the following: | (i) | By an overall reduction of Rs. 10 per unit on all the units sold, | | (ii) | By increasing the variable selling and distribution expenses by 5%. | | (iii) | The direct material costs would go down by 1% due to discount on bulk buying. |
Required| (i) | Prepare a flexible budget at the level of 5 lakh and 10 lakh units of production. | | (ii) | Calculate the Break-Even Point (BEP) before and after expansion. | | (iii) | Advise which level of output should be chosen for expansion. |
|
| 11 | (0) |
| 4. | (a) | Day–Night Travelling Agency has to deal with a number of clients. The time taken by the officer of the agency to deal with clients and the arrival pattern of clients follow the distribution given below:
Time to deal with the clients: Minutes
2
4
6
10
14
20
30 | Probability
0.05
0.10
0.15
0.30
0.25
0.10
0.05 |
Time elapsing between arrivals of clients: Minutes
1
8
15
25 | Probability
0.20
0.40
0.30
0.10 |
You are required to simulate the arrival and serving of 10 clients by taking the following Random Numbers and (i) indicate which of the clients will wait for how many minutes and (ii) calculate probability of time office being idle.
Taking the starting time as 10 a.m. Random Numbers for: Arrival pattern:
Serving pattern: | 02
60 | 48
73 | 43
61 | 75
35 | 89
28 | 36
16 | 96
80 | 47
46 | 36
60 | 61
11 |
| 10 | (0) |
| | (b) | A factory operates for 8 hours everyday and has 240 working days in the year. It buys a large number of small machines which can be served by its maintenance Engineer at a cost of Rs. 5 per hour for the labour and spare parts. The machines can alternatively be serviced by the supplier at an annual contract price of Rs. 25,000 including labour and spare parts needed. The supplier undertakes to send a repairman as soon as a call is made but in no case more than one repairman is sent. The service time of the Maintenance Engineer and the supplier's repairman are both exponentially distributed with respective means of 1.7 and 1.5 days. The machine break downs occur randomly and follow Poisson distribution, with an average of 2 in 5 days. Each hour that a machine is out of order, it costs the company Rs. 10. Which servicing alternative would you advise it to opt for?
You may assume that the conditions of a (M/M/I) queue system is applicable. | 6 | (0) |
|
| 5. | (a) | Royal Industries Ltd. has two divisions–M and N. Division–M manufactures product A–15 which it sells in outside market as well as to Division–N which processes it to manufacture Z–25. The Management of Division–N has expressed the opinion that transfer price is too high. The two Divisional Managers are about to enter into discussions to resolve the conflict, and Manager of Division–M to supply him with some information prior to discussions. Division7ndash;M has been selling 50,000 units to outsiders and 10,000 units to Division–N, all at Rs. 25 per unit. It is not anticipated that these demand will change. The variable cost is Rs. 15 per unit and the fixed costs are Rs. 3 lakhs. Divisional investment in assets is Rs. 12 lakhs. The Manager of Division–M anticipates that Division–N will want a transfer price of Rs. 22. If he does not sell to Division–N, Rs. 40,000 of fixed costs and Rs. 2,00,000 of assets can be avoided. The Manager of Division–M would have no control over the proceeds from the sale of the assets and is judged primarily on his rate of return.
Required: | (i) | Should the Manager of Division–M transfer its products at Rs. 22 to Division N? | | (ii) | What is the lowest price that the Division–M should accept? |
| 11 | (0) |
| | (b) | Why do transfer pricing system exist? What are the criteria to be considered in assessing a system of transfer–pricing? | 5 | (0) |
| 6. | (a) | The following table shows all the necessary information on the availability of supply to each factory of BEST Industries Ltd., the requirement of each destination and the unit transport cost (in Rs.) from each factory to each destination: | Factory | Destination | Supply |
A
B
C
Demand | I
5
6
3
75 | II
1
4
2
20 | III
7
6
5
50 |
10
80
15
|
Required: | (i) | Use high–low method to measure the cost behaviour of the photocopy department in formula form. |
| (ii) | What are the benefits and disadvantages of using the high–low method for measuring cost behaviour. |
| 10+6 | (0) |
| 7. | (a) | Delta Ltd. has a manufacturing division which makes a product to which the following details relate:
Direct Material : 5 kg. at Rs. 20
Direct Labour : 12 hours at Rs. 20
Variable overheads : 12 hours at Rs. 10 | Per unit (Rs.)
100
240
120 |
Relevant fixed overheads are based at Rs. 1,00,000 per month and planned output is 2,000 units per month. The selling price is Rs. 550 per unit. During a recent month when output was, 1,800 units, the following actual cost were incurred:
Direct Material (8,500 kg)
Direct Labour (20,000 hours)
Variable overhead
Fixed overhead
Profit
Sales value | Rs.
1,72,000
4,20,000
2,20,000
98,000
9,10,000
40,000
9,50,000 |
| (i) | Calculate the variances which occurred during the month. | | (ii) | Reconcile the actual profit with standard profit, showing the causes of the variances. |
| 12 | (0) |
| | (b) | How are variances disposed of? | 4 | (0) |
| 8. | Write short notes on the following:- | 4x4=16 | |
| | (a) | Manufacturing Resources Planning–II (MRP II); | | (0) |
| | (b) | Planning programme Budgeting System (PPBS); | | (0) |
| | (c) | Modelling in Operation Research; | | (0) |
| | (d) | Balanced Scorred. | | (0) |
