|Total No. of Questions— 6]||[Total No. of Printed Pages—10|
|Time Allowed : 3 Hours||Maximum Marks : 100|
|Answers to questions are to be given only in English except in the cases of candidates who have opted for Hindi medium. If a candidate who has not opted for Hindi medium, answers in Hindi, his answers in Hindi will not be valued.|
|Question No. 1 is compulsory. |
Answer any four Questions from the rest. Working notes should form part of the answer.
Make assumptions wherever necessary.
|1.||(a)||Define Total Quality Management? What are the six Cs for successful implementation of TQM?||4||(0)|
|(b)||What steps are involved in value chain analysis approach for assessing competitive advantages?||4||(0)|
|(c)|| Carlon Ltd. makes and sells a single product, the unit specifications are as follows : |
Carlon Ltd. requires to fulfil orders for 5,000 product units per period. There are no stock of product units at the beginning or end of the period under review. The stock level of material X remains unchanged throughout the period.
Carlon Ltd. is planning to implement a Quality Management Programme (QMP). The following additional information regarding costs and revenues are given as of new and after implementation of Quality Management Programme.
The Total Quality Management Programme will have a reduction in Machine Run Time required per product unit to 0.5 hr.
|2.||(a)|| C Preserves produces Jams, Marmalade and Preserves. All the products are produced in a similar fashion; the fruits are cooked at low temperature in a vacuum process and then blended with glucose syrup with added citric acid and pectin to held setting. |
Margins are tight and the firm operates, a system of standard costing for each batch of Jam.
Standard processing loss 3%.
Actual output was 1,164 kgs of rasberry jam.
|(b)||"Balanced score card and performance measurement system endeavours to create a blend of strategic measures, outcomes and drive measures and internal and external measures". Discuss the statement and explain the major components of a balanced score card.||4||(0)|
|(c)||Explain clearly the terms Resource Smoothing and Resource Levelling.||4||(0)|
|3.||(a)|| During the Last 20 years, KL Ltd’s manufacturing operation has become increasingly automated with Computer–controlled robots replacing operators. KL currently manufactures over 100 products of varying levels of design complexity. A single plant rise overhead absorption rate, based on direct labour hours, is used to absorb overhead costs. |
In the quarter ended March, KL’s manufacturing overhead costs were :
During the quarter, the company reviewed the Cost Accounting System and concluded that absorbing overhead cost to individual products on a labour hour absorption basis is meaningless. Overhead costs should be attributed to products using an Activity Based Costing (ABC) system and the following was identified as the most significant activities :
It was further observed that in the short–term KL’s overheads are 40% fixed and 60% variable. Approximately, half the variable overheads vary in relating to direct labour hours worked and half vary in relation to the number of quality inspections.
Equipment operation and maintenance expenses are apportioned as :
During the quarter :
KL’s production during the quarter included components R, S and T. The following information is available :
|(b)|| An electronics firm which has developed a new type of fire–alarm system has been asked to quote for a prospective contract. The customer requires separate price quotations for each of the following possible orders : |
The firm estimates the following cost per unit for the first order :
X represents the cumulative total volume produced to date expressed as a multiple of the initial order.
Y is the learning curve factor, for a given X value, expressed as a percentage of the cost of the initial order.
|4.||(a)||"The diverse use of routinely recorded cost data give rise to a fundamental danger information prepared for one purpose can grossly misleading in another context". |
Discuss to what extent the above statement is valid and explain your conclusion.
|(b)||Explain different types of Competitive pricing?||4||(0)|
|(c)|| R Ltd. has spare capacity in two of its manufacturing departments— Department 4 and Department 5. A five day week of 40 hours is worked, but there is only enough internal work for 3 days per week so that 2 days per week (16 hours) could be available in each department. R Ltd. has sold this time to another manufacturer, but there is some concern about the profitability of this work.|
The accountant has prepared a table giving the hourly operating cost in each department. The summarised figures are as follows :
The labour is paid on a time basis and there is no charge in the weekly wage bill whether or not the plant is working at full capacity. The overhead figures are based on firm's current overhead absorption rates (fixed and variable) when the departments are operating at 90% of full capacity (assume a 50 week year). The budgeted fixed overhead attributed to department 4 is Rs. 36,000 p.a. and that for Deptt. 5 Rs. 50,400 p.a.
As a short term measure the company has been selling processing time to another manufacturer @ Rs. 70 per hour in either departments. The customer is willing to continue this arrangement and to purchase any spare time available, but R Ltd. is considering the introduction of a new product on a minor scale to absorb the spare capacity.
Each unit of the new product would require 45 minutes in Deptt. 4 and 20 minutes in Deptt. 5. The variable cost of the required input material is Rs. 10 per unit. The market study indicated as follows :
You are required to calculate the best weekly programme for the spare time in the two manufacturing departments, to determine the best price to charge for the new product and to quantity the weekly gain that this programme and price should yield.
|5.||(a)||"Because a single budget system is normally used to serve several purposes, there is a danger that they may conflict with each other". Do you agree? Discuss.||4||(0)|
|(b)|| AB Cycles Ltd. has 2 divisions. A and B which manufacture bicycle. Division A produces bicycle frame and Division B assembles rest of the bicycle on the frame. There is a market for sub–assembly and the final product. Each division has been treated as a profit centre. The transfer price has been set at the long–run average market price. The following data are available to each division : |
|(c)|| Determine the selling price per unit to earn a return of 12% net on capital employed (Net of Tax @40%) |
The cost of production and sales of 80,000 units per annum are :
The fixed portion of capital employed is Rs. 12 lacs and the varying portion is 50% of sales turnover.
|6.||(a)||Explain which features of the Service organizations may create problems for the application of activity–based costing.||4||(0)|
|(b)|| A company manufactures two products A and B, involving three departments— Machining, Fabrication and Assembly. The process time, profit/unit and total capacity of each department is given in the following table : |
Set up Linear Programming Problem to maximise profit. What will be the product Mix at Maximum profit level?
|(c)|| A product comprised of 10 activities whose normal time and cost are given as follows : |
Indirect cost Rs. 9 per day.