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                                                                           FM02

                                                   Management Control Systems

                                                                   (For CNM Cases)

Assignment II

  Assignment Code: 2016FM02A2                                                          Last Date of Submission: 30^th April 2016

                                                                                                            Maximum Marks: 100

Attempt all the questions. All the questions are compulsory and carry equal marks.

                                                                          Section-A

1.         What do you mean by Reporting? How is it useful as a control system?

2.         (a)          What is a 'Balanced Score Card’? Briefly discuss how the Balanced Score Card will

                        help to overcome some of the limitations identified above.

            (b)          Suggest a framework for implementing a Performance Measurement System at a

                        large manufacturing organization.

3.         What do you mean by budgetary control system? Explain the process of budgetary control in an                                               organization.

4.         (a)          Discuss the implications of Corporate Strategies for the design of Management     

                             Control systems.

                (b)          "Design and operation of control systems are significantly influenced by top                       management style".  Comment.

Section-B

Case Study

The profit budget for the Sinduri company for January 2006 was as follows:

               

                Standard cost per unit

(Rs.000)
Sales		Rs.2500
Standard cost of sales		1620
Gross profit		880
Selling expenses	Rs.250
Research and Development expenses	300
Administrative expenses	120
Total expenses		670
Net profit before taxes		Rs.210

The product information used in developing the budget was as follows:

	P	Q	R	S
Sales units (000)	1000	2000	3000	4000
Price per unit	Rs.0.15	Rs.0.20	Rs.0.25	Rs.0.30
Standard cost per unit
Material	0.04	0.05	0.06	0.08
Direct labour	0.02	0.02	0.03	0.04
Variable overhead	0.02	0.03	0.03	0.05
Total Variable cost	0.08	0.10	0.12	0.17
Fixed overhead (Rs.000)	20	60	60	160
Total Standard cost per unit	0.10	0.13	0.14	0.21

The actual revenues and costs for January’2006 were as flows:

	(Rs.000)
	Sales					Rs.2160
	Standard cost of sales					1420
	Net standard cost of variances					160
	Actual cost of sales					1580
	Gross profit					580
	Selling expenses		Rs.290
	Research and Development expenses		250
	Administrative expenses		110
	Total expenses					650
	Net loss					(-) Rs.70
				P	Q		R		S
Sales (units)				1000	1000		4000		3000
Sales Price				Rs.0.13	Rs.0.22		Rs.0.22		Rs.0.31
Production				1000	1000		2000		2000
Actual manufacturing cost (000) :
Material		Rs.360
Labour		200
Overhead		530

Case Question:

Prepare an analysis of variance between actual profits and budgeted profits for January 2006.