FM02 Management Control Systems Assignment I

FM02
Management Control Systems
Assignment I
Last Date of Submission: 15th October 2014
Maximum Marks:100
Assignment Code: 2014FM02B1
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”
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
10,000
10,000
10,000
Rs. 70,000
Rs. 15,000
Rs. 30,000
30,000
45,000
16,000
Material purchased outside
Standard volume
Inventories (average)
Fixed assets (net)
Page No. 1 of 3
FM02
Management Control Systems
Assignment II
Assignment Code: 2014FM02B2
Last Date of Submission: 15th November 2014
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)
(b)
What is a 'Balanced Score Card‟? Briefly discuss how the Balanced Score Card will
help to overcome some of the limitations identified above.
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)
(b)
Discuss the implications of Corporate Strategies for the design of Management
Control systems.
"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
Selling expenses
880
Rs.250
Research and Development expenses
300
Administrative expenses
120
Total expenses
Net profit before taxes
670
Rs.210
Page No. 2 of 3
The product information used in developing the budget was as follows:
Sales units (000)
Price per unit
P
Q
R
S
1000
2000
3000
4000
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
20
60
60
160
0.10
0.13
0.14
0.21
Fixed overhead (Rs.000)
Total Standard cost per unit
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
1000
1000
4000
3000
Sales Price
Rs.0.13
Rs.0.22
Rs.0.22
Rs.0.31
Production
1000
1000
2000
2000
Sales (units)
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.
Page No. 3 of 3