**21**answerable questions with

**0**answered.

Roll No……… | |

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 case of candidates who have opted for Hindi Medium. If a candidate has not opted for Hindi medium, his answers in Hindi will not be valued. |

Question Number 1 is compulsory. |

Attempt any five Out of the remaining six questions. |

Working notes should form part of the answer. |

No statistical or other table is to be distributed along with this question paper |

Graph sheet will be provided to candidates along with this paper. |

Marks |

1. | (a) | A company has decided to launch a new product X which is expected to have a demand of 10,000 units during the year at Rs. 160 per unit. The following information is furnished by the company :
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(b) | The following table gives the unit transportation costs and the quantities demanded/ supplied at different locations for a minimisation problem :
(Candidates may use the standard notation of C (Note: The full solution is not required to be worked out). | 5 | (0) | |||||||||||||||||||||||||||||||||||||||||||||||||

(c) | XY Ltd. makes two products X andY, whose respective fixed costs are F_{1} and F_{2}. You are given that the unit contribution of Y is one fifth less than the unit contribution of X, that the total of F_{1} and F_{2} is Rs. 1,50,000, that the BEP of X is 1,800 units (for BEP of X, F_{2} is not considered) and that 3,000 units is the indifference point between X and Y.(i.e. X and Y make equal profits at 3,000 unit volume, considering their respective fixed costs). There is no inventory build up as whatever is produced is sold. You are required to find out the values of F _{1} and F_{2} and unit contributions of X and Y. | 5 | (0) | |||||||||||||||||||||||||||||||||||||||||||||||||

(d) | State whether each of the following independent activities is value–added or non–value–added :
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2. | (a) | AB Ltd. makes component ‘C’ and billing machines. Division A makes component ‘C’ that is used in the final assembly of the machine in Division B.(One unit of Component ‘C’ is used per machine). Component C has an outside market also. A and B operate as profit centres and each can take its own decisions. The following data is given in the existing scenario for Divisions A and B, under which Division A has enough special and external demand to use its capacity and hence is offering B rates of 800 Rs./unit for quantity up to 750 units and 900 Rs./unit for more than 750 units, so that its outside contribution is not affected by transfers to B. A and B can sell any quantity up to the maximum indicated under ‘units sold’, without affecting their future demands.
For the next period, A requires for its own use in its selling outlets, 50 units of billing machines produced by B. B’s manager proposes as follows: Option I – B will supply 50 machines to A on its variable manufacturing cost basis provided A supplies to B, 500 units of Component C at A’s variable manufacturing cost basis. Option II – Both A and B resort to total variable cost per unit basis applicable to normal external sale, though neither A nor B incurs any selling cost on inter division transfers. A will be given 50 machines for its use. A will have to supply B all the 900 units that B requires. Option III – Both A and B use the external market selling price (i.e. 1,000 and 4,000 Vunit for 900 units of Component ‘C’ and 50 machines respectively). From a financial perspective, advise Division A’s manager what he should choose. Support your advice with relevant figures. What is the change in the rate of discount per unit given by B to A (based on unit transfer price to market price ratio) from option I to option II? (Note : Students need not work out the total cost statements. Steps showing relevant figures for evaluation are sufficient). | 10 | (0) | ||||||||||||||||||||||||||||||||||||||||||||||||

(b) | The standard set for a chemical mixture of a company is as under :
The actual quantity produced was 1800 kg of output from the following:
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3. | (a) | A company is operating 60% of its capacity with a turnover of Rs.43.20 lacs. If the company works at 100% capacity, the sales–cost relation is : Factory cost is two thirds of sales value. Prime cost is 75 % of factory cost. Administration and selling expenses (75 % variable) are 20 % of the sales value. Factory overhead will vary according to operating capacity as given below:
The company has planned to operate at 80 % of its capacity. Moreover, it has received an export order and its execution will involve 40 % of the capacity. The prime cost of the order is estimated at Rs. 6.0 lacs and the shipping involved will be around Rs. 1.0 lac. Administration and selling expenses will be avoided on the export order. Taking the same percentage of profits as on the domestic sales, determine the minimum price to be quoted for the export order. | 8 | (0) | ||||||||||||||||||||||||||||||||||||||||||||||||

(b) | In a transportation problem for cost minimization, there are 4 rows indicating quantities demanded and this totals up to 1,200 units. There are 4 columns giving quantities supplied. This totals up to 1,400 units. What is the condition for a solution to be degenerate ? | 3 | (0) | |||||||||||||||||||||||||||||||||||||||||||||||||

(c) | State with a brief reason whether you would recommend an activity based system of costing in each of the following independent situations :
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4. | (a) | Ezee Ltd makes two products, E and Z. All units produced are sold. There is no inventory build up. Production facilities may be used interchangeably for both the products. Sales units are the limiting factor. The following information is given:
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(b) | The following linear program is presented to you;
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5. | (a) | A machine manufacturing company needs four components A, B, C and D. The components may be procured from outside. The cost, market price for the components and other information are given below :
There are constraints on the machine time in manufacturing all the components. Total machine hours available is only 12,000 hours. It is possible to use the machine time in a second shift which will attract 20 % extra wages and other fixed overheads at Rs. 6,000 for every 1,000 hours or part thereof. With relevant supporting figures, advise the best course of action to maximize the profits. (Note : Students need not work out the complete profitability statement). | 8 | (0) | ||||||||||||||||||||||||||||||||||||||||||||||||

(b) | The following network and table are presented to you :
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6. | (a) | PQR Ltd is considering introducing a new product at a price of Rs. 105 per unit. PQR Ltd’s controller has complied the following incremental cost inforrnation based on an estimate of 1,20,000 units of sales annually for the new product :
Annual inventory carrying costs not included in the flexible manufacturing support listed earlier are estimated to be 12% of inventory value. In addition, the sales manager expects the introduction of new product to result in a reduction in sales of existing product from 3,00,000 to 2,40,000 units. The contribution margin for the existing product is Rs. 20 per unit. Prepare a statement showing the budgeted impact on PQR’s profits on the introduction of the new product. Should the new product be introduced? | 8 | (0) | ||||||||||||||||||||||||||||||||||||||||||||||||

(b) | Explain the features of a balanced score card. | 4 | (0) | |||||||||||||||||||||||||||||||||||||||||||||||||

(c) | Classify the following items under the more appropriate category : Category (CC)–Cost Control Or Category ( CR)– Cost Reduction.
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7. | Answer any four out of the following five questions: | |||||||||||||||||||||||||||||||||||||||||||||||||||

(a) | The following is a part of a network. What are activities P and Q called? How would you rectify the situation? | 4 | (0) | |||||||||||||||||||||||||||||||||||||||||||||||||

(b) | The following matrix was obtained after performing row minimum operation on rows R_{1} and R_{2} in an assignment problem for minimization. Entries "xx" represent some positive numbers. (It is not meant that all "xx" numbers areequal). State two circumstances under which an optimal solution is obtained just after the row minimum and column minimum operations. (Candidates may use cell references as C
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(c) | A refreshment centre in a railway station has two counters – (i) self–service (opted by 60% of the customers) and (ii) attended service (opted by 40% of the customers). Both counters can serve one person at a time. The arrival rate of customers is given by the following probability distribution :
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(d) | Define the following:-
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(e) | Suggest suitable cost units for the following services :
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