|Time Allowed : 3 Hours||Full Marks : 100|
|The figures in the margin on the right side indicate full marks|
|Attempt Question NO. 1 (carrying 20 marks) and any five |
(each carrying 16 marks) from the rest.
|1.||In each of the cases given below one out of four answers is correct. Indicate the correct answer (= 1 mark) and give your working/reasons in support of your answer (= 3 marks):|
|(a)|| Market research has revealed that the maximum demand lies for products X and Y. The standard variable costs per unit of the products are as follows: |
The Management Accountant determined the optimal production plan by using graphical linear programming. He noticed that the optimal plan was given at any point on the part of the feasible region that was formed by the constraint line for the availability of materials.
|(b)|| In a project consisting of ten activities, an activity M with a duration of 17 days starts with event 1 and ends with event 2. If the earliest occurence time and the latest occurrence time of event 2 are the 27th and the 46th day respectively and total float of the activity is 20 days, then free float of the activity is |
|(c)|| A company which sells three products furnishes the following sales information for November, 2006: |
The expected size of the market was 5,000 units and the actual size of the market for November, 2006, was 5,300 units. the market share variance and sales mix variance are:
|(d)|| A company is preparing a quotation for a new product. The time taken for the first unit is 30 hours. The company expects 85% learning curve (index is – 0.2345). The company desires that the quotation should be based on the time taken for the final output within the learning period which is expected to end after the company has produced 200 units. |
The time per unit of product to be used for the quotation is:
|(e)|| The normal capacity of a company is 5,000 units of product P per month. The company planned to produce an output of 4,800 units in November 2006 and accordingly prepared the following budget of expenses. |
The company had an opening stock of 400 units on 1st November 2006 and at the end of November 2006, the closing stock was 600 units. The selling price of the product is Rs. 25 per unit. The actual output produced and fixed costs incurred during November 2006 were same as budgeted. There is no change in the rate of variable costs.
|2.||(a)||Explain backflush accounting and the circumstances in which its use will be appropriate.||4||(0)|
|(b)|| A company which manufactures electric motors uses-in-time manufacturing system which is supported by a backflush accounting system. The backflush accounting has two trigger points for the creation of journal entries. The two trigger points are (i) Purchase of raw materials and (ii) Manufacture of finished goods. |
The standard cost sheet of the product is as under:
There were no opening stocks of raw materials, work–in–progress or finished goods is on 1st October 2006. You are required to pass journal entries entries and prepare ledger accounts to record the above transactions for October 2006.
|3.|| A company manufactures two products A and B. The demand for the products is large enough that the entire quantity produced each month can be sold. The cost sheet of the two products are as under: |
The extracts from Balance Sheet as at 30th November, 2006, are as under:
The raw materials inventory consists of 100 kg. of materials suitable for product A and 100kg. of materials suitable for product B. These materials are not inter changable between the products A and B. The relevant information are as under:
|4.|| A company manufactures, Automated Toy cars for children above 12 years. The daily output of the Toy cars is currently around 200 Nos. However, depending upon availability of various inputs the production level varies inputs the production level varies from low of 196 Nos. per day to 204 Nos. per day. The probability distribution of such production is as under: |
Because of handling and transportation problems only 200 Toy car could be despatched out of the factory every day.
|5.||(a)||What is loss leader pricing?||4||(0)|
|(b)|| A Company is currently producing a product called product A and the unit cost of manufacturing is Rs. 60. Some improvement is proposed which will increase the unit cost of manufacture of the improved product called product B to Rs. 67. Additionally the sale and administration cost will be Rs. 20 per unit for both products. |
The sale price of product A and product B are as under:
The improvement in product A, will increase the total market of this type of product by 5% from the current market size which is for 50 lakhs pcs. The current market share of product A is 40%, which would remain as such, if the manufacture continues to sell product A. However, it has been feared that with increased selling price of the proposed product B. 30% of the existing customer of product A will switch over to other products marketed by competitions at a cheaper price although such products will not have the improved features. Both product A and product B would required to be updated after every year in a rapidly changing market. You are required to give your opinion with relevant calculations as regard which product the company should produced.
|6.||(a)||Explain with sample as to how to compute the optimal ordering policy where conditions of price-break are applicable.||4||(0)|
|(b)|| A manufacturer uses a component at the rate of 2500 units/year. The basic cost of the component is Re. 1/– each and the marginal cost of carrying inventory is 20% of the cost of the item. The supply cost of the components have to be collected from the supplier involving an overall transport cost of Rs. 40/– per trip. |
|7.||Metflow Division is a part of the AKG Group, Metflow Division produces a single product for which it has an external market which utilises 80% of its production capacity. Akali Division which is also a part of the AKG Group, requires units of the product available from Metflow as input to a product which will be sold outside of the Group. Akali Division's requirements are equal to 40% of Metflow Division's production capacity. Akali Division has a potential source of supply from outside the AKG Group. The outside supplier can supply 75% of Akali Division's requirements. The outside source may wish to quote a higher price if Akali Division only intends to take up part of its product availability. |
Discuss aspects of transfer pricing principles and information availability which will affect the likely achievement of group profit maximisation from the sourcing decision made by Akali Division in the above situation.
|8.||Better budgeting in recent years may have been seen as a movement from ‘incremental budgeting’ to ‘alternative budgeting approaches’. |
Explain in what way management accountant can adopt the services they provide to the new environment. Your answer should refer to the modern models of:
(b) balanced scorecard; and
(c) activity based methods.