FM02
Management Control Systems
(For CNM Cases)
Assignment I
Assignment Code: 2016FM02A1 Last Date of Submission: 30th April 2016
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1 “Value Chain Analysis can provide valuable inputs for management control”. Do you agree with this statement? Why or why not?
2 Briefly explain:
1. Elements of Control Process
2. Cost-Based Transfer Prices
3. Functions of the Controller
3 What is ‘Transfer Price’ and what are the various methods of determining it?
4 What is ‘Goal Congruence’? Elaborate
Section-B
Case Study
Division P of Action Shoe company manufactures product “ α “, which is sold to Division Q as a component of product “β”. Product “β” is sold to Division R, which uses it as a component in product “γ” . Product “γ” is sold to customers outside the company. The intra company pricing rule is that products are transferred between divisions at standard cost plus a 10% return on inventories and fixed assets. From the information provided below, calculate the transfer price for product “α” and “β” and the standard cost of product “γ”
Standard cost per unit
Product “α” Product “β” Product “γ”
Material purchased outside Rs. 2.00 Rs. 3.00 Rs.1.00
Direct labour 1.00 1.00 2.00
Variable overhead 1.00 1.00 2.00
Fixed overhead per unit 3.00 4.00 1.00
Standard volume 10,000 10,000 10,000
Inventories (average) Rs. 70,000 Rs. 15,000 Rs. 30,000
Fixed assets (net) 30,000 45,000 16,000
Management Control Systems
(For CNM Cases)
Assignment I
Assignment Code: 2016FM02A1 Last Date of Submission: 30th April 2016
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
1 “Value Chain Analysis can provide valuable inputs for management control”. Do you agree with this statement? Why or why not?
2 Briefly explain:
1. Elements of Control Process
2. Cost-Based Transfer Prices
3. Functions of the Controller
3 What is ‘Transfer Price’ and what are the various methods of determining it?
4 What is ‘Goal Congruence’? Elaborate
Section-B
Case Study
Division P of Action Shoe company manufactures product “ α “, which is sold to Division Q as a component of product “β”. Product “β” is sold to Division R, which uses it as a component in product “γ” . Product “γ” is sold to customers outside the company. The intra company pricing rule is that products are transferred between divisions at standard cost plus a 10% return on inventories and fixed assets. From the information provided below, calculate the transfer price for product “α” and “β” and the standard cost of product “γ”
Standard cost per unit
Product “α” Product “β” Product “γ”
Material purchased outside Rs. 2.00 Rs. 3.00 Rs.1.00
Direct labour 1.00 1.00 2.00
Variable overhead 1.00 1.00 2.00
Fixed overhead per unit 3.00 4.00 1.00
Standard volume 10,000 10,000 10,000
Inventories (average) Rs. 70,000 Rs. 15,000 Rs. 30,000
Fixed assets (net) 30,000 45,000 16,000
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