|Total No. of Questions — 7]||[Total No. of Printed Pages — 12|
|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, his answers in Hindi will not be valued.|
|Q.No. 1 is compulsory.|
|Attempt any five questions from the remaining six questions.|
|Working notes should form part of the answer.|
|1.||(a)|| The standard cost for producing 180 kgs of a product whose raw material inputs are A and B is given below : |
The actual prices of A and B were Rs.12 and Rs.8 per kg respectively. Consumption of B was 108 kg. The actual output at 80% yield was 144 kg.
Calculate the following direct material variances :
|(b)|| Sportswear Ltd. manufactures sportswear shirts and shorts. The production budget for these two products has to be prepared for the next three months, November 2010, December 2010 and January 2011. |
The following information is given :
You are required to prepare the production budget for each product for November, December 2010 and January 2011.
|(c)||A factory has a special offer to produce 4 units of a labour intensive product by using its existing facilities after the regular shift timings. The product can be produced by using only overtime hours which entails normal rate plus 25%, so that usual production is not affected. Two workers are interested in taking up this additional job every evening after their usual shift is over. One is an experienced man who has been working on a similar product. His normal wages are Rs.48 per hour. The other worker is a new person who earns Rs.42 an hour as normal wages. He can be safely considered to have a learning curve ratio of 90% for this work. The company wants to minimize labour cost for the order and only one person is to be chosen for the job. The experienced man will take 20 hours for the first unit while the new worker will take 30 hours for the first unit. Evaluate who should be chosen for the job.||5||(0)|
|(d)|| You are given the following linear program. Introduce appropriate variables and restate the problem to set up the simplex tableau. (Do not attempt further solution.) |
|2.||(a)|| M Ltd. makes two products, X and Y, in their respective divisions. Each unit of Y needs one unit of X. Divisions X and Y are profit centres and can function according to their divisional interests. |
In the external domestic market, X can sell either 6000 units at Rs.1,000 per unit or 5000 units at Rs.1,120 per unit.
X has a production capacity of 7000 units, with each unit requiring 2 hours. Y also has a production and demand of 7000 units.
Y can buy product X from outside as follows :
Y resorts to bulk purchase to avail maximum possible discount.
Given that any one or more of the offers may be accepted, what will be X's best strategy ?
What will be the corresponding transfer price ?
[A detailed cost statement is not essential. Only figures relevant for decision making are required to be considered under each analysis.]
|(b)|| State the pricing strategy that you would advise in the following situations which are independent of each other : |
|3.||(a)|| ABC Ltd. manufactures four products A, B, C & D in the same factory. The following information is given for a certain period : |
The plant works such that after machining, the defectives in each run are automatically segregated and dumped separately in a container. The good units pass through the process and are further checked for quality by the inspectors of quality control who charge by the number of batches inspected.
The total production and selling overheads of the company are the following for the period :
The following additional information is given :
Choose appropriate activity cost drivers for each overhead cost and calculate the overhead cost per unit of good output for each of the products under the ABC system.
|(b)|| At the end of activity 6-7, a product is to be launched and the date has been announced for the inaugural function, based on the normal duration of activities as given in the network below. Activities have been subcontracted by the project manager to contractors A, B, C, D, E, F, G & H as indicated in the table below. Each subcontractor offers a discount on his contract price for each day given to him in addition to the normal days indicated in the network. What will be the maximum discount that the project manager may earn for the company without delaying the launch of the product ? |
|4.||(a)|| The manager of a hotel providing lodging facilities wants to expand his services to include manual booking (reservation or cancellation) of railway tickets for his clients. He does not want to have electronic booking due to operational difficulty. He has the following information : |
The manager estimates that there will be 2,500 bookings per month for 3 months of peak season. 1,000 bookings per month for 2 months of moderate business and 700 bookings per month during the remaining period. He cannot charge more than the prevailing rate of ? 30 per booking charged by other agents.
Calculate the total cost per booking.
What is the estimated profit the manager hopes to achieve for the full year ? What should be the average minimum volume to justify the setting up of the new service ?
|(b)|| A manufacturing company makes 4 products that are sold through 8 regional offices countrywide. The products pass through 3 production processes in a factory. A separate market research division monitors outside competition. This division is outside the sales management hierarchy. |
As a management accountant, suggest some routine reports for performance measurement to be made to :
|5.||(a)|| A company has 3 factories F1, F2 and F3 which supply the same product to 5 agencies, Ap A2, A3, A4 and A5. Unit production costs, shipping costs and selling prices differ among the different sources and destinations and are given below : |
Shipping Costs Rs./u.
Without actual re-calculation, briefly explain how your solution is likely to be affected.
|(b)||The selling price per unit of a product is Rs.14. For the forthcoming period, the demand will be only 5,000 units. The fixed expenses at 50% activity (5,000 units) will be Rs.30,000. The company is thinking of shutting down operations, in which case an additional amount of Rs.2,000 will have to be incurred for shutting down and only Rs.20,000 of the above fixed costs can be avoided. |
What should be the variable cost per unit to recommend a shut down ?
|6.||(a)|| Aero Ltd. has hired an aircraft to specially operate between cities A and B. All the seats of the aircraft are economy class. |
The following information is available :
There is an offer from another airlines operator, Mid Air Ltd. for a stop–over at destination D, which is on the way from A to B. Due to this, the flight will operate from A to D, then D to B.
The following terms are to be considered for the stop–over :
50 seats will be booked by Mid Air at Rs.2,500 per ticket, whether or not Mid Air is able to sell them to its customers. No agents' commission is payable on these tickets.
60 new passengers will be booked by Aero’s travel agents for travel from A to D at a fare of Rs.2,000 per passenger.
Since the stop–over wastes more time, 25 of Aero’s original passengers from A to B will drop out and seek other airlines which fly directly from A to B.
Due to the stop–over, fuel costs will increase from Rs.90,000 to Rs.1,35,000, Additional airport landing / baggage handling charges of Rs.19,000 per stop–over will have to be incurred by Aero Ltd.
Aero Ltd. will have to serve snacks to all passengers in the D to B sector at no charge to passenger. Each snack will cost Aero Ltd. Rs.200. This will be in addition to the original food at Rs.300 served in the A to D sector.
You may assume that fuel costs are not affected by the actual number of passengers in a flight. You may ignore non–financial considerations, additional wear and tear to aircraft due to extra landing / take–off.
Without considering Mid Air’s offer,
|(b)||How can simulation be applied in practical situations ?||4||(0)|
|7.||Answer any four of the following:|
|(a)||Discuss the impact of JIT systems on overhead costs.||4||(0)|
|(b)||What are benefits of Enterprise Resource Planning ?||4||(0)|
|(c)|| A company’s four products, M, N, O and P are in the market. Identify the phase of life cycle for each product with a brief reason. |
|(d)|| Three different salesmen X, Y and Z are to be assigned three different regions A, B and C so that the company's revenue is maximised. The following matrix gives the sales revenue : |
You are required to use the assignment technique to maximise revenue.
|(e)|| TP Ltd. produces a product which passes through two processes – cutting and finishing. |
The following information is provided:
The selling price of the product is Rs.1,000 per unit and the only variable cost per unit is direct material, which costs Rs.400 per unit. There is demand for all units produced.
Evaluate each of the following proposals independent of each other :