| 1. | (a) | State whether the following statements are ‘True’ or ‘False’. If false, you are to put up the correct statement. No credit will be given for merely stating ‘False’. If ‘True’, just mention ‘True’. You need not rewrite the statement: | 1x5 | |
| | | (i) | Value Analysis process is a less important tool than Function Analysis System Technique. | | (0) |
| | | (ii) | The term Value has four different meanings–exchange value, cost value, use value and wealth value. | | (0) |
| | | (iii) | The Balance Score Card puts more stress on financial parameters than on non–financial parameters, since its objective is the growth of the organization. | | (0) |
| | | (iv) | The Matrix Organization structure is suitable for large projects. | | (0) |
| | | (v) | Akio Morita is credited with pioneering the cost approach of target costing. | | (0) |
| | (b) | Expand the following abbreviation: | 1x5 | |
| | | (i) | PLCM | | (0) |
| | | (ii) | HRP | | (0) |
| | | (iii) | COSU | | (0) |
| | | (iv) | EFQM | | (0) |
| | | (v) | PDCA | | (0) |
| | (c) | Define the following terms: | 2x5 | |
| | | (i) | Bench Marking | | (0) |
| | | (ii) | Mckinsey’s 7–S Framework | | (0) |
| | | (iii) | Capacity Planning | | (0) |
| | | (iv) | Supply Chain Management | | (0) |
| | | (v) | Data Mining | | (0) |
| | (d) | Fill in the blanks with appropriate word/(s): | 1x5 | |
| | | (i) | VAR is_____________. | | (0) |
| | | (ii) | _____________has become a standard practice among many organizations as a way to add flexibility to chain. | | (0) |
| | | (iii) | Balanced Score Card is a performance management and______________ methodology that helps executives translate an organization’s mission statement and overall business strategy with specific quantifiable goals. | | (0) |
| | | (iv) | Balance Score Card is a way to translate____________into______________. | | (0) |
| | | (v) | Kaizen is a Japanese term comprising KAI = _________________ and ZEN = ___________. | | (0) |
| 2. | (a) | patients arriving at a village dispensary are treated by a doctor on a first–come–first served basis. The inter–arrival time of the patients is known to be uniformly distributed between 0 and 80 minutes, while their service time is known to be uniformly distributed between 15 and 40 minutes. It is desired to simulate the system and determine the average time a patient has to be in the queue for getting service and the proportion of time the doctor would be idle. Carry out the simulation, using the following sequences of random numbers. The numbers have been selected between 00 and 80 to estimate inter–arrival times and between 15 and 40 to estimate the service times required by the patients: Series I (Inter–arrival random nos. in mins.)
Series 2 (Inter-service random nos. in mins.) | 07
23 | 21
37 | 12
16 | 80
28 | 08
30 | 03
18 | 32
25 | 65
34 | 43
19 | 74
21 |
Assume the starting time as 8.00 A.M. | 8 | (0) |
| | (b) | M/s. Bilimoria & Co., is currently working with a process, which, after paying for materials, labour etc., brings a profit of Rs. 10,000. The following alternatives are made available to the company: | (i) | The company can conduct research (R1) which is expected to cost Rs. 10,000 and having 90% probability of success, the company gets a gross income of Rs. 25,000. | | (ii) | The company can conduct research (R2) expected to cost Rs. 5,000 and having a probability of 60% success. If successful, the gross income will be Rs. 25,000. | | (iii) | The company can pay Rs. 6,000 as royalty of a new process which will bring a gross income of Rs.20,000. | | (iv) | The company continues the current process. | | (v) | Data Mining |
Because of limited resources, it is assumed that only one of the two types of research can be carried out at a time. Which alternative should be accepted by the company? | 7 | (0) |
| 3. | (a) | XYZ Ltd., manufacture only one product. A review of the results of the first quarter of the year, made by the top management, revealed the following: Sales (in units)
Loss (Rs.)
Fixed cost (for the year Rs. 120,000)
Variable cost per unit (Rs.) | 10,000
10,000
30,000
800 |
The Finance Manager, who feels perturbed, suggests that the company should at least break-even in the second quarter with a drive for increased sales. Towards this, the company should introduce better packing, which will increase the cost by Re. 0.50 per unit. The Sales Manager has an alternative proposal. For the second quarter, additional sales promotion expenses can be increased to the extent of Rs. 5,000 and a profit of Rs. 5,000 can be aimed at during the period with increased sales. The Production Manager feels otherwise. To improve the demand, the selling price per unit has to be reduced by 3%. As a result, the sales volume can be increased to attain a profit level of Rs. 4,000 for the quarter. The Managing Director asks you as a Cost Accountant to evaluate all the above three proposals and calculate the additional sales volume that would be required in each case, In order to help, him to take a decision. | 8 | (0) |
| | (b) | A manufacturer of fountain pens selling in the market at Rs. 100per dozen makes a net profit of 20% on sales by producing 50,000 dozen per annum against a capacity of 75,000 dozens. His cost sheet for the year 2011 was as under: | Cost per dozen (Rs.) | Direct materials
Direct wages
Works overheads (50% of this is variable)
Sales overhead (25% of this is variable) | 36
30
10
4 |
During next year i.e. 2012, he anticipates his fixed costs to increase by 6%, cost of direct materials by 5% and labour (with whom an agreement had been concluded) by 10%. Market enquiries revealed that the selling price of the product and quantity will remain unchanged in the year 2012. An enquiry has been received for the supply of 10,000 dozens to a customer. What could be the lowest quotation, if the business wants to make a minimum profit of Rs. 8 lacs during the year 2012? Give detailed workings. | 7 | (0) |
| 4. | (a) | What is Aggregate Planning? What are the two planning strategies available to the Aggregate Planner? | 1+2 | (0) |
| | (b) | For a particular product, the following output is planned for the next 6 months: | Month | Output in units | 1
2
3
4
5
6 | 100
150
300
300
500
150 |
The constant capacity of production per month in normal time is 200 units at an output cost of Rs. 15 per unit. Production carried out by overtime working, which will have to be limited to 50 units per month, will incur an output cost of Rs. 25 per unit. Any excess requirement of production unit will have to be obtained from a subcontractor at an output cost of Rs. 30 per unit.
The company policy prevents utilizing back orders.
The Inventory Carrying Cost is Rs. 5 per unit.
Calculate cost of aggregate plan. | 8 | (0) |
| | (c) | What is MCS? List its characteristics | 1+3 | (0) |
|
| 5. | (a) | What are the various steps essential for Quality Improvement, as stated by Philip Crosby? Mention at least 10 steps. | 5 | (0) |
| | (b) | You have been provided with the following information in respect of a particular company which manufactures a single product: Production and sales per month
Selling price per unit
Variable cost of production per unit | =
=
= | 2000 Units
Rs.1,000
Rs.700 |
The company is toying up with two different suggestions to implement an Inspection Policy. Those are:
Suggestion No.1.
To avoid final inspection, strengthen inspection at the stage of raw material inputs, at a cost of Rs. 10,000 per month (raw materials rejected at this stage will be replaced by the supplier free of cost) and improve machining inspection at an additional cost of Rs. 15,000 per month. After such step, it is expected that 1% of the quantity sold is to be replaced under free warranty clause.
Suggestion No.2.
To inspect the finished goods at a cost of Rs. 20,000 per month. In that case, 3% of the production is likely to be detected as defective and scrapped at nil value. Such scrapped units can be set right by incurring a re¬working cost of Rs. 5,000 for every 25 units of total units scrapped. You are required to advise | (i) | Which suggestion is better? |
| (ii) | Classify the quality cost under |
| (b) | external failure costs. |
| 3+2+2 | (0) |
| | (c) | What is a System? Name different types of Systems. | 1+2 | (0) |
| 6. | (a) | Laxmi Engg. Company is a single product company, having a manufacturing capacity of 6000 units per week of 48 hours. The output data of different element of cost for three consecutive weeks are given below: | Units produced | Direct Material
(Rs.) | Direct Labour
(Rs.) | Total factory Overheads
(Variable & Fixed)
(Rs.) | 2,400
2,800
3,600 | 4,800
5,600
7,200 | 6,000
7,000
9,000 | 37,200
38,400
40,800 |
As a Management Accountant, you are asked by the company to work out the selling price assuming an Activity level of 4000 units per week and a profit of 20% on selling price. | 3 | (0) |
| | (b) | A Single Product Manufacturing Company made its budget for the year 2010-11 with 5000 units of output. The financial results in respect of the actual output of 4800 units achieved during the year were as under: | Rs. | Direct Material
Direct Wages
Variable Overheads
Fixed Variable
Profit
Sales | 29,700
44,700
72,750
39,000
36,600
2,22,750 |
The standard direct wage rate is Rs. 4.50 per hour and the standard variable overhead rate is Rs. 7.50 per hour. The cost accounts recorded the following variances for the year: | Variances | Favourable
(Rs.) | Adverse
(Rs.) | Material Price
Material Usage
Wage Rate
Labour Efficiency
Variable Overhead Expense
Variable Overhead Efficiency
Fixed Overhead Efficiency
Selling Price | –
–
750
–
3,000
–
–
6,750 | 300
600
–
2,250
–
3,750
1,500
– |
Required: | (i) | Prepare a statement showing the original budget. |
| (ii) | Prepare the standard product cost sheet per unit. |
| 6+6 | (0) |
| 7. | (a) | Max Steel Company present output details of a unit, as given below: | Per month | | Output | 12,000 | units | Workers employed
Sales (all production)
Contribution
Fixed Cost |
Rs.
Rs.
Rs. | 300
1,20,000
48,000
12,000 |
The Company’s top management plan to introduce more mechanization into the unit at a capital cost of Rs. 20,000. The proposed mechanization will lead to reduction in the labour force by 50. But the productivity can be increased by 80%. To provide necessary incentive to the workers for higher productivity, the company top management intends to offer a 2% rise on the piece work rate of Rs. 2 per unit of every 10% increase in average individual output. It is also proposed to reduce the selling price by 5% to sell the entire production.
As a Management Consultant, You have to calculate the extra monthly contribution resulting from the proposed mechanization. If the cost of capital is assumed to be 9% p.a., what would be the increase in the net profit per month? | 8 | (0) |
| | (b) | List the merits of Contribution Approach. | 4 | (0) |
| | (c) | What are the shortcomings of the Balanced Score Card? | 3 | (0) |
| 8. | Write short notes on (any three) from the following: | 3x5 | |
| | (a) | Theory of Constraints; | | (0) |
| | (b) | Basic elements of a control system; | | (0) |
| | (c) | Core concepts of TQM; | | (0) |
| | (d) | Limitations of Standard Costing. | | (0) |
