Full Text Transcript
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~t')tq,"rde lVJanagemen.. ~1AY2010
""~urse (Part II ExClcmiJiaaOii
G+~.g2-Mi;magement ContrCi and
Roll No :........................
Management O\..lt
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Total No. of Questions-5] [Total No. of Printed Pages-4
Time Allowed-3 Hours Maximum Marks-100
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Answer all questions.
Marks
1. The following is the Balance Sheet of a concern as on 31.3.2009 : 20
Rs. Rs.
Capital 12,00,000 Fixed assets
Trade creditors 2,50,000 (at cost less depreciation) 5,00,000
Profit and Loss alc 80,000 Stock 4,50,000
Debtors 2,50,000
Cash and Bank balances 3,30,000
15,30,000 ~5,30,000
The management makes the following estimate for the year ended 31.3.2010 :
Upto February, 2010 March, 2010
Rs. Rs.,
.
Purchase 15,20,000 . 1,05,000
.
Sales 22,40,000 2,50,000
Additional'information :
(i) It has been decided to invest Rs. 1,50,000 in purchase of Fixed assets. Which
are depreciated @ 10%.
(ii) The time lay for payment to creditors and receipts from debtors is one month.
(iii) The Business earns. a Gross profit of 33i% on turnover.
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(iv) Sundry expenses against Gross profit will amount to 12% of the turnover
(excluding depreciation on Fixed assets).
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You are required to prepare a projected fund flow statement for the year
ended 31.3.10. ..
2. Define Working capital reports. What different Working capital reports are
prepared for the purchase of controlling working capital?
3. What do you mean by decision making? Explain the necessary steps involved
in the process of decision making.
4. Briefly discuss Net present value method vs internal rate of return method
of ranking of projects.
2. MIs. Usha Co. Private Ltd. of Ghaziabad produces one product. The sales realisation 20
from the product is estimated to be Rs. 20 lacs in 2008-09. The cost of goods sold
has been forecasted as follows:
Rs. Lacs
Direct Material 4
Direct Labour 6
Variable works overhead 3
-Fixed works overhead 2
15
In March, 2008-09, the Managing Director to the company feels ,that, rising
costs have already set in and it is necessary to reorganise the company's production
and sales policy. The Sales manager believes that if the product is not redesigned,
the following operating results will be obtained:
Material price will register an increase of 5%.
Direct labour charges will increase by 8%.
Variable works overhead will vary proportionately with direct labour.
In the sale price is increased to yield the same rate of gross profit on cost of
goods sold as in 2008-09, there will be 10% reduction in the number of units
in 2009:10.
If the product is redesigned according to suggestion offered by the Sales Manager,
it is expected that there will be 10% increase in the number of units sold even
with an increase of 10% in the selling price per unit. The redesigning of product
would involve the following changes:
Material quantity consumption will increase by 8% because of poor quality of
material and material price will reduce by 5% on average in the year 2009-10.
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Average direct labour rate in 2009-10 will be 10% below the average for 2008-09
as the redesign of the product will permit change in the manufacturing operations
requiring engagement of semi-skilled workers. But 15% increase in the direct
labour hours per unit would be required than was forecasted in 2008-09 variable
works overhead will continue to maintain the same ratio with direct labour, but
it is expected to increase by 8% due to price changes etc.
You are required to prepare Cost and Profit statement on the basis of above
assumptions and cost and operating data, if the same product is continued in
2009-10 and if it is re~esigned according to Sales Manager's suggestions.
3. The most recent statement of the financial position of a small wholesale business
of a sole trader appears in summarised form as below:
Profit and Loss Account for the year ended 31st March, 2009 20
Rs.
Sales 36,000
Cost of goods sold 23,040
Gross profit 12,960
Operating expenses 8,640
.Net profit ~,320
Balance Sheet as at. 31st March, 2009. Rs.
Fixed assets, net of accumulated depreciation 2,350
On a straight line basis
Current assets Rs.
Stocks 7,680
Debtors 6,000
Cash 1,178
14,858
Less Current liabilities
Credi tors 1,920
Trade expenses 720 2,640 12,218
Proprietor's interest 14,568
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The proprietor is 60 years old and plans to retire in 5 years time. Demand for
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his product was constant throughout the year ended 31st March, 2009 a~d
upto that date he had expected it to continue at the same level, but he now
expects it to fall steadily by an equal monthly amount over the 5 years period,
beginning in April, 2009 and falling to zero by 31st March, 2014. He asks you
to assume that there will be no changes in sales price or purchase price in the
products stocked and sold over the period nor in the periods of credit received
and allowed nor in the stock' turnover period and also assume that he can
reduce. his operating costs by about a fifth annually, starting immediately in
April, 2009.
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The business is not seasonal. You are required to calculate the amount of net cash
flow for the year ended 31st March, 2010.
4. (a) You have been appointed as the Management auditor of a large company. The 10
Managing Director of that company asks from you a Tentative Audit Programme
for examining energy use in the organisation so that an action programme
can be developed for energy savings. Prepare a suitable programme.
(b) What are the essential elements of Budgetary control? Distinguish between 10
a programme budget and responsibility budget.
5. Write short notes on the following: 20
(a) Control by exception
(b) Role of creativity in decisIon making
(c) Profitability index
Cd) Control report.
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