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SECTION - B

(3 20 = 60)

Answer any THREE questions.

All questions carry equal marks.

9. How can productivity be improved ? What

are the salient factors which you would
emphasize about productivity improvement ?

10. Discuss the various methods used for the

determination of transfer prices.

11. Zed Ltd. had a profit plan approved for

selling 6,000 units per month at an average
selling price of Rs. 12 per unit. The budgeted
variable cost of production was Rs. 480
per unit and the fixed costs were budgeted
at Rs. 24,000 ; the planned income being
Rs. 12,000 per month. Due to shortage of
raw materials, only 4,800 units could be
produced and the cost of production increased
by 60 paise per unit. The selling price was
raised by Rs. 120 per unit. In order to
improve the production process, an expenditure
of Rs. 1,200 was incurred for research and
development activities.
Yo u a r e r e q u i r e d t o p r e p a r e a
performance budget and a summary report.

Register Number :

Name of the Candidate :

1588

M.Com. (Accounting & Finance)

DEGREE EXAMINATION, 2008
( SECOND YEAR )
( PAPER - X )

650. COST CONTROL TECHNIQUES

May ]

[ Time : 3 Hours

Maximum : 100 Marks

SECTION - A

(5 8 = 40)

Answer any FIVE questions.

All questions carry equal marks.

1. Bring out the importance of value analysis in

cost reduction programme.

2. What are the pre-requisites for the successful

implementation of a sound system of budgetary
control ?
3. What is meant by standard costing ? State its
main objectives.
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4. List out the assumptions underlying cost volume
profit analysis.

5. The standard material required to manufacture

one unit of product - X is 10 kg. and

the standard price per kg. of material is

Rs. 250. The cost accounts records, however,

reveal that 11,500 kg. of materials costing
Rs. 27,600 were used for manufacturing 1,000
units of product - X. Calculate material
variances.

6. An automobile manufacturing company finds

that while the cost of making in its own

workshop part No. 0057 is Rs. 600 each,

the same is available in market at Rs. 560

with an assurance of continuous supply. Write

a report to the Managing Director giving your

views whether to make or buy this part. Give

also, your views in case the supplies reduce
the price from Rs. 560 to Rs. 460.

The cost data is also, given.

Rs.

Materials

200

Other variable costs

050

Direct labour

250

Depreciation and other

fixed costs

100
600

7. From the following information relating to quick

standard Ltd., you are required to find out :
(a) Contribution.

(b) BEP in units.

(c) Margin of safety

and (d) Profit.

Total fixed costs

Total sales

Total variable costs -

Units sold

Rs. 4,500

Rs. 7,500

Rs. 15,000

5,000

8. What are the guiding principles in setting

transfer prices ?

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Calculate :

(a) P/V ratio.

(b) Fixed cost.

(c) Break - even point.

(d) Sales required to earn a profit of

Rs. 5,000.

(e) Margin of safety for the second year.

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12. Using the following information, calculate
labour cost variance, labour rate variance,
labour efficiency variance and idle time
variance :
Standard hours

- 5,000

Actual hours

- 6,000

Standard wage rate Rs. 4 per hour.

Actual wages rate Rs. 350 per hour.

Time lost on account of machinery breakdown

300 hours.

13. The sales turnover and profit during the two

years were as follows :

First year

Second year

Sales
Rs.

2,00,000
3,00,000

Profit
Rs.

20,000
40,000

Turn over