**25**answerable questions with

**0**answered.

F—17(MDM)Revised Syllabus | |

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) which is compulsory and any five (each carrying 16 marks) from the rest. |

Marks |

1. | (a) | In each of the cases/statements given below, one out of the four alternatives is correct. Indicate the correct answer (=1 mark). | 1x8 | ||||||||||||||||||||||||||||||

(i) | Joint Cost are useful for:
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(ii) | The combination of management by objectives, developed with input from the individual manager and the budgeting process is an example of:
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(iii) | Which of the following is not a cost of decentralization?
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(iv) | Automark makes a special gadget for the cars it produces. The machine for the gadget works to full capacity and incurs Rs. 15 Lacs and Rs. 40 Lacs respectively as variable and fixed costs. If all the gadgets were purchased from an outside suppliers, the machine could be used to produce other items, which would earn a total contribution of Rs. 25 Lacs. What is the maximum price that Automart should be willing to pay to the outside suppliers for the gadgets, assuming there is no change in fixed costs:
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(v) | Proforma financial statements are part of the budgeting process, Normally, the last proforma statement prepared happens to be the
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(vi) | In determining cost behavior in business, the cost function is often expressed as y = a + bx. Which one of the cost estimation methods should not be used in estimating fixed and variable costs for the equation?
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(vii) | Premium Pricing
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(viii) | Following is a table of probabilities for two separate product lines, X and Y:
The Product line to obtain maximum utility for a risk–averse decision maker is
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(b) | 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): | 4x3 | |||||||||||||||||||||||||||||||

(i) | A company manufactures and sells two products P and Q. The cost sheet of the two products is as under:
The optimal production plan obtained by use of graphical method of linear programming revealed 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 direct materials.
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(ii) | A company uses a combination of time series and regression analysis in forecasting its sales for the next year. On the basis of the past analysis, the company has developed the following equation y = 26x + 8850 for obtaining the quarterly trend of sales. In the aforesaid equation the value of x represents the quarterly period and the value of y represents the quarterly trend of sales in units. The value of x for the first quarter of the next year will be 25. Using the multiplicative (proportional) model, the quarterly seasonal variations have been estimated as under:
The manufacturing of the product will take place at a constant level and the company does not hold any stocks of finished products at the end of any year.
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(iii) | A company manufactures two products and a component which is used in these products. One component is used in each of the two products and the purchase price of the components is Rs. 25 each. The data relating to the products and component are as under:
The specific fixed costs can be avoided if the manufacture of the product or component is discontinued. The company has surplus plant capacity and it is proposed to manufacture its requirement of 5,000 components during the period under review. In pursuance of this decision, the break–even sales value of the company if the units of products A and B are sold in the ratio of 4 : 3 respectively will be nearest to:
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2. | (a) | Poor Dhanchand Kuberji! The newspapers claim that he is making Rs. 5.7 crore a year. He claims that this is not true in a present value sense and that he will really be making the following amounts for the next five years:
Years 1–0.935, Years 2–0.873, Years 3–0.816, Year 4–0.763, Years 5–0.713. | 2+6 | (0) | |||||||||||||||||||||||||||||

(b) | The Shadow company products three products–A, B and C. The current sales, costs, selling prices, and processing times are as follows:
The firm is working at full capacity i.e., 13,500 processing hours per year. Fixed manufacturing overheads are absorbed into unit costs by a charge of 200% of variable costs. This procedure fully absorbs the fixed manufacturing overheads. – Processing time can be switched from one product line to another, – the selling prices are fixed for the products, – the demands at current selling prices are A–11,000, B–8,000, C–2,000 (units).
| 6+2 | (0) | ||||||||||||||||||||||||||||||

3. | (a) | Standard Pump Ltd. is making petrol and diesel operated pumps. The company wants to have a customer survey on this. You are asked to work out the economics of choice between the two types of pumps. You are provided with the following data:
Using the above data, answer the following questions:
| 4+4 | (0) | |||||||||||||||||||||||||||||

(b) | Many traditional management accounting practices are criticized because of their failure to include assumptions about human behavior. for the following area, vig.,
discuss, with reference to practical situations, how the effects of human behavior should be recognized in the introduction and operation of the system. | 4+4 | (0) | ||||||||||||||||||||||||||||||

4. | The following data relate to time estimates of three activities with discrete probabilities of each:
You are required to: (i) Draw the Project Network showing the expected time of each activity. What is the duration of the critical path? (ii) State the probability of completing the project within the largest time of 12 weeks. | 4+2+10 | (0) | ||||||||||||||||||||||||||||||

5. | A company engaged in job order business has received an order from a large customer for executing a job which is outside the range of its normal activities. Since the company has surplus capacity, the management is desirous of quoting for the job. The designing department staff visited the customer’s site and spent 200 hours in designing and estimation work. They also incurred travelling expenses for this purpose. The following is the estimate prepared by them:
The following additional information is available:
You are required to prepare an estimate of the cost of the job using relevancy and opportunity cost approach. | 16 | (0) | ||||||||||||||||||||||||||||||

6. | A small insurance company estimates that in the next year it will receive Rs. 50 lakhs in premium that will flow in a steady rate throughout the year. This income will be invested at 20% per annum but the cost to the company of making an investment is Rs. 200 for each investment made and, in addition, 2% of the sum invested.
| 3+2+(3+2) +3+2+1 | (0) | ||||||||||||||||||||||||||||||

7. | A manufacturer produces two components A and B. The following details are available:
There are following additional costs and those are allocated to the components A and B as per the following bases:
You are required to work out:
| 12+4 | (0) | ||||||||||||||||||||||||||||||

8. | Write short notes on the following (any four): | 4x4 | |||||||||||||||||||||||||||||||

(a) | Just–in–Time System for materials; | (0) | |||||||||||||||||||||||||||||||

(b) | Pareto Analysis; | (0) | |||||||||||||||||||||||||||||||

(c) | Back Flush Accounting; | (0) | |||||||||||||||||||||||||||||||

(d) | Economic Value Added; | (0) | |||||||||||||||||||||||||||||||

(e) | Capital Rationing; | (0) | |||||||||||||||||||||||||||||||

(f) | Reasons for emergence of Activity Based Costing. | (0) |