**13**answerable questions with

**0**answered.

Roll No…………… | |

Total No. of Questions — 5] | [Total No. of Printed Pages — 3 |

Time Allowed : 3 Hours | Maximum Marks : 100 |

Answer all questions. |

Marks |

1. | (a) | A company uses absorption costing system based on standard costs. The total variable manufacturing cost is Rs. 6 per unit. The standard production rate is 10 units per machine hour. Total budgeted and actual fixed production overhead costs are Rs. 8,40,000. Fixed production overhead is allocated at Rs. 14 per machine hour. Assume this same standard for the last year and current year. Selling price is Rs. 10 per unit. Variable selling overheads are Rs. 2 per unit and fixed selling costs are Rs. 2,40,000. Assume that there are no price, spending or efficiency variances. Beginning inventory was 30,000 units and ending inventory was 40,000 units.
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(b) | A Project Manager has to manage various projects. For each project given below, you are required to advise him whether to use PERT or CPM and briefly state the reason:
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2. | (a) | Spares Ltd. Produces spare part ‘X’ for cars. The company has an annual production capacity of 1,80,000 units of X. However, the actual production is carried out according to the volume of order received. For the next year, the company has received an order for a value of Rs. 64,00,000. To meet the requirements of the order, the company has to work at 70% capacity for the first four months, 80% capacity for next six months, and 90% capacity for the remaining period of the year. Assume no opening or closing stocks. The following information is available: Material cost is Rs. 15 per unit. Labour Rs. 12 per unit, subject to a minimum of Rs. 1,30,000 p.m. Variable overheads Rs. 5 per unit. Fixed overheads Rs. 16,000 per month. Semi–variable overheads Rs. 75,000 per annum incurred upto 70% average annual capacity utilisation. Thereafter, it increases at Rs. 5,000 per annum for every 10% average annual capacity increase. If the company targets a return of 27% on budgeted cost, should the order be accepted ? Justify your answer showing budgeted annual values for each element of cost for the next year. | 12 | (0) | |||||||||||||||||

(b) | What are the benefits of a target costing system ? | 3 | (0) | ||||||||||||||||||

(c) | What is product life cycle costing? What are its benefits? | 4 | (0) | ||||||||||||||||||

3. | (a) | A company produces two products, x1 and x2 with respective unit contributions of Rs. 8 and Rs. 6. Each product passes through machining operations in two machining centres, MI and MII, whose capacities are limited to 60 and 48 hours respectively with corresponding slack variables S The following table gives the values for an interaction under the simplex method for maximising the contribution:
You are required to:
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(b) | A hospital has to pay nurses for 40 hours a week. One nurse is assigned to one patient. The cost per hour for each of the nurses is given below:
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(c) | What is benchmarking? What is the code of conduct suggested for ethical and effective benchmarking? | 4 | (0) | ||||||||||||||||||

4. | (a) | AB Ltd. Has two divisions, A and B, making products A and B respectively. One unit of A is an input for each unit of B. B has production capacity of 45,000 units and ready market for 45,000 units in both the years 2010 and 2011. Other information available:
B buys input A from outside at a slightly incomplete stage at Rs. 30 per unit and incurs sub–contract charges at Rs. 20 per unit to complete it to a stage to match the output of Division A. In 2011, subcontract charges will increase to Rs. 30 per unit. B is willing to pay A, the price it incurs viz. Rs. 50 and Rs. 60 per unit in 2010 and 2011 respectively, provided A supplies B’s full requirement. For any lesser quantity, (B will accept any quantity), B is willing to pay A only Rs. 45 and Rs. 55 per unit in 2010 and 2011 respectively. Assume no changes in inventory levels. In 2011, A may choose to avoid the variable selling overhead of Rs. 5 per unit on transfers to B or special order, by incurring a fixed overhead of Rs. 50,000 p.a. instead.
| 8+4+3 | (0) | |||||||||||||||||

(b) | In an unbalanced minimisation transportation problem, with positive unit transport costs from 3 factories to 4 destinations, it is necessary to introduce a dummy destination to make it a balanced transportation problem. How will you find out if a given solution is optimal? | 4 | (0) | ||||||||||||||||||

5. | (a) | X uses traditional standard costing system. The inspection and setup costs are actually Rs. 1,760 against a budget of Rs. 2,000. ABC system is being implemented and accordingly, the number of batches is identified as the cost driver for inspection and setup costs. The budgeted production is 10,000 units in batches of 1,000 units, whereas actually, 8,800 units were produced in 11 batches.
| 6 | (0) | |||||||||||||||||

(b) | What is penetration pricing policy? Why and when it is used? | 7 | (0) | ||||||||||||||||||

(c) | With a view to improving the quality of customer services, a Bank is interested in making an assessment of the waiting time of its customers coming to one of its branches located in residential area. This branch has only one teller’s counter. The arrival rate of the customers and the service rate of the teller are given below:
You are required to simulate 10 arrivals of customers in the system starting from 11 AM and show the waiting time of the customers and idle time of the teller. Use the following random numbers taking the first two random numbers in two digits each for first trial and so on : 11, 56, 23, 72, 94, 83, 83, 02, 97, 99, 83, 10, 93, 34, 33, 53, 49, 94, 37 and 97. | 6 | (0) |