FM02
Management Control Systems
Assignment - I
Assignment Code: 2015FM02A1 Last Date of Submission: 15th May 2015
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 “Value Chain Analysis can provide valuable inputs for management control”. Do you
agree with this statement? Why or why not?
Ques. 2 Breifly explain
1.Elements of Control Process
2.Cost-Based Transfer Prices
3.Functions of the Controller
Ques. 3 What is ‘Transfer Price’ and what are the various methods of determining it?
Ques. 4 What is ‘Goal Congruence’? Elaborate
Section-B
Case Study
Division P of Action Shoe company manufactures product “ a “, which is sold to Division Q as a component of product “ß”. Product “ß” is sold to Division R, which uses it as a component in product “?” . Product “?” 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 “a” and “ß” and the standard cost of product “?”
Standard cost per unit
Product “a” Product “ß” Product “?”
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
FM02
Management Control Systems
Assignment - II
Assignment Code: 2015FM02A2 Last Date of Submission: 15th May 2015
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 What do you mean by Reporting? How is it useful as a control system?
Ques. 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.
Ques. 3 What do you mean by budgetary control system? Explain the process of budgetary
control in an organization.
Ques. 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
Prepare an analysis of variance between actual profits and budgeted profits for January 2006.
Management Control Systems
Assignment - I
Assignment Code: 2015FM02A1 Last Date of Submission: 15th May 2015
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 “Value Chain Analysis can provide valuable inputs for management control”. Do you
agree with this statement? Why or why not?
Ques. 2 Breifly explain
1.Elements of Control Process
2.Cost-Based Transfer Prices
3.Functions of the Controller
Ques. 3 What is ‘Transfer Price’ and what are the various methods of determining it?
Ques. 4 What is ‘Goal Congruence’? Elaborate
Section-B
Case Study
Division P of Action Shoe company manufactures product “ a “, which is sold to Division Q as a component of product “ß”. Product “ß” is sold to Division R, which uses it as a component in product “?” . Product “?” 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 “a” and “ß” and the standard cost of product “?”
Standard cost per unit
Product “a” Product “ß” Product “?”
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
FM02
Management Control Systems
Assignment - II
Assignment Code: 2015FM02A2 Last Date of Submission: 15th May 2015
Maximum Marks: 100
Attempt all the questions. All the questions are compulsory and carry equal marks.
Section-A
Ques. 1 What do you mean by Reporting? How is it useful as a control system?
Ques. 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.
Ques. 3 What do you mean by budgetary control system? Explain the process of budgetary
control in an organization.
Ques. 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
Prepare an analysis of variance between actual profits and budgeted profits for January 2006.
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