AIMA Solved Assignments for FM02
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Subject Code: FM02
Subject Name: MANAGEMENT CONTROL SYSTEMS
Component name: ASSIGNMENT 1
Assignment Start Date: 15/11/2022
Assignment End Date: 15/01/2023
Question 1:- The use of cost-based transfer prices has the advantage of _____.
a) being easy to determine using existing accounting records
b) disguising the true cost-behaviour pattern of the good or service being transferred
c) leading to goal congruence and managerial effort more than the use of market-based prices
d) reducing inefficiency on the part of the supplying division
Question 2:- Which of the following is NOT correct with respect to Management Control System
a) Management Control is not automatic
b) The standard is pre-set
c) Management Control requires co-ordination among individuals
d) The connection from perceiving the need for action and the action required to obtain the desired result may not be clear
Question 3:- Maintenance Expenses of the plant Rs. 2,600 at 80% activity & Rs. 2,750 at 100% activity. Find the fixed cost?
a) 1,800
b) 2,100
c) 2,000
d) None of the above
Question 4:- Which of the following is NOT an element of control system?
a) Assessor
b) Detector
c) Communication network
d) Refector
Question 5:- Profit centers can _____.
a) be used in both centralized and decentralized organizations
b) never be used by organizations regardless of their degree of centralization in decision making
c) only be used if an organization is centralized in structure
d) only be used if an organization is decentralized in structure
Question 6:- Based on the extent of formalisation , management controls can be classified in to formal and informal controls. Formal controls ……..
1. are exerted by establishing a corporate culture and value system in which there is an interactive exchange of information.
2. involves establishing standard rules and procedure for control of activities and their out comes.
3. are also called bureaucratic controls.
4. are further classified into feedback and feedforward control.
a) Only 3 & 4
b) Only 2 & 3
c) Only 1
d) Only 1 & 4
Question 7:- The present value of the cash flows from a project is Rs. 6.72 crore while the net benefit cost ratio is 0.2. What will be its present value?
a) 1.20 crore
b) 2.20 crore
c) 3.20 crore
d) 1.12 crore
Question 8:- A/an ————— management control system facilitates organisational learning and the adoption of new strategies with the external environment in focus.
a) Boundary
b) Traditional
c) Adaptive
d) Diagnostic
Question 9:- Which of the following is incorrect?
1. EVA combines profit centre & investment centre concepts.
2. In case of EVA same rate of interest may be used for different types of assets.
3. The EVA in contrast to ROI has a strong positive correlation with changes in company`s market share.
4. With EVA all business units have the same profit objective for comparable investments.
a) 1
b) 2
c) 3
d) 4
Question 10:- ……….. have a small relative market share in high growth market
a) Question Marks
b) Cash cows
c) Dogs
d) Stars
Question 11:- Which of the following is INCORRECT?
a) EVA = NOPAT – Cost of Capital x Economic book value of Capital Employed in the firm
b) Economic book value of Capital Employed in the firm(Return on Capital – Cost of Capital)
c) PAT – Cost of Equity x Equity Employed in the firm.
d) None of the above
Question 12:- If the net working capital is negative then it indicates that:
a) Long term funds have been used for financing long term assets.
b) Short term funds have been used for financing long term assets.
c) Long term funds have been used for financing short term assets
d) Long term funds have been used for financing long term assets.
Question 13:- S Company sells a product for Rs.35. Budgeted sales for the first quarter of 2010 are as follows: January Rs.600,000, February Rs.240,000 , March Rs.900,000. The company collects 70% in the month of sale and 25% in the following month. Five percent of all sales are uncollectible and are written off. Budgeted cash receipts for March are _____
a) 6,50,000
b) 6,40,000
c) 6,90,000
d) 6,80,000
Question 14:- Factors influencing transfer pricing in multinational companies include _____.
a) restrictions on sales tax to foreign owners imposed by foreign governments
b) maximizing worldwide taxes and duties
c) complying with legal restrictions placed on the setting of transfer prices such as the use of “arm`s-length” values required in the U.S.
d) All of the above
Question 15:- ROI means:
a) Rate of Interest
b) Return on Investments
c) Rate of Indexation
d) Rate of Investment
Question 16:- What provides for the basis for comparing the relative strengths of different businesses in terms of strength of their positions in their respective markets?
a) Value Chain Analysis
b) The Five forces model
c) The 7S Framework
d) The BCG matrix
Question 17:- In preparing budgets, ———-provide data on the expected level of activity while ———– provide data on the financial achievements of past and current operations
a) managerial forecasts; accounting reports
b) budgeting guidelines and benchmarks; accounting reports
c) managerial forecasts; audit reports
d) budgeting guidelines and benchmarks; auditing reports
Question 18:- If the total cost for producing 1000 units is Rs. 12000, and for 1100 units, it is 13,000; the nature of cost is
a) Semi- Variable cost
b) Variable cost
c) Fixed cost
d) The information is not sufficient
Question 19:- The objective of a transfer pricing system should be to _____.
a) maximize the transfer price
b) maintain goal congruence between the divisions and the entire firm
c) minimize the transfer price
d) Both A & C
Question 20:- Arrange the following as part of control process: 1. Measure achievement 2. Set goals and performance measures. 3. Compute the variances as a result of the proceeding comparison. 4. Compare achievement with goals
a) 1, 2, 3 & 4
b) 4, 3, 2,& 1
c) 2, 1, 4 & 3
d) 2, 4, 1 & 3
Subject Code: FM02
Subject Name: MANAGEMENT CONTROL SYSTEMS
Component name: ASSIGNMENT 2
Assignment Start Date: 15/11/2022
Assignment End Date: 15/01/2023
Question 1:- Which of the following statements are CORRECT?
a) Task control is transaction oriented
b) Many task control activities are scientific
c) Task control is the process of assuring that specific tasks are carried out effectively & efficiently
d) All of the above
Question 2:- Which of the following is INCORRECT?
a) Strategic formulation involves only part of the organisation
b) Strategic formulation is essentially systematic
c) Analysis of proposed strategy usually involves relatively few people
d) None of the above
Question 3:- Which of the following responsibility centers does not have accountability for revenues?
a) investment centers
b) profit centers
c) revenue centre centers
d) cost centers
Question 4:- Which of the following is INCORRECT?
a) Management Control Systems help in assuring better quality
b) Management Control Systems help in creating faster cycles to market
c) Management Control Systems help in coping with anticipated change
d) None of the above
Question 5:- If the total cost for producing 1000 units is Rs. 12000, and for 1100 units, it is 13,200; the nature of cost is
a) Fixed Cost
b) Variable Cost
c) Semi-variable Cost
d) The information is not sufficient
Question 6:- Which of the following is INCORRECT with respect to control system
a) The effectors directs the foot to ease up or press down the accelerator
b) The nerves from the communication system transmits information from eyes to brain and brain to foot
c) The sensors measures actual speed by observing the speedometer
Question 7:- Sometimes market prices cannot be used in a transfer-pricing situation. Which of the following is not a reason that market prices cannot be used?
a) may be impossible to determine
b) may be very costly to gather the information
c) may be inapplicable in the transfer pricing situation
d) may be non-existent
Question 8:- The heads of different departments/ business units propose their budgets taking in to consideration the existing facilities, employees, objectives, etc. Generally, the ……….. is the first among the responsibility centres to develop its budget.
a) Profit center
b) Standard cost center
c) Investment center
d) Revenue center
Question 9:- Which of the following is INCORRECT?
a) Creation of large strategic planning department and delegating the preparation strategic planning to the staffing department
b) Strategic planning could end up becoming from-filling, bureaucratic exercise devoid of strategic planning
c) Strategic planning requires less time and is expensive
d) None of the above
Question 10:- If the current assets and current liabilities are Rs.2,000 lacs and Rs.1,200 lacs respectively. How much amount can be borrowed on a short-term basis without reducing current ratio below 1.5?
a) 400 lacs
b) 500 lacs
c) 600 lacs
d) 450 lacs
Question 11:- What causes Economic Value Added (EVA) to increase?
a) The cost of capital is lowered by altering the financial strategy
b) Capital is withdrawn from activities which earn inadequate returns
c) Additional capital is invested in projects that earn a higher rate of return greater than the cost of capital
d) All of the above
Question 12:- Which of the following will not have an impact on the project’s cost?
a) Increase in the expected cost of land
b) Increase in pre-operative salaries
c) Increase in excise duty on the items to be produced
d) Decrease in margin money requirements
Question 13:- Defining the company mission, specifying objectives, and developing strategies are a part of the ………… Process.
a) Evaluation & control
b) Environmental scanning
c) Strategy implementation
d) Strategy Formulation
Question 14:- There are only a few………… Which are able to grow in to……….. because the stage of growth in the industry is characterised by a lot of uncertainty that results from change in technologies, distribution channels, and the players themselves.
a) Stars, Dogs
b) Question Marks, Stars
c) Stars, Question marks
d) Cash cows, stars
Question 15:- The flexible budget is prepared using the _____.
a) historical levels of activity
b) actual levels of activity
c) most conservative levels of activity
d) estimated levels of activity of the closest competitor
Question 16:- According to the nature of monetary inputs and outputs, responsibility centres can be classified in to four types. Which of the following is not one of these four types?
a) Quality center
b) Cost Center
c) Revenue center
d) Profit center
Question 17:- ………..constitute the foundation of the cybernetic process of management control
a) Policies
b) Goals
c) Action plans
d) Standards
Question 18:- An organisation`s ……….. & ………… Act as guidelines for strategy formulation
a) mission, objective
b) vision, goal
c) vision, mission
d) objective, mission
Question 19:- Which of the following is INCORRECT?
a) More funds are invested in projects with lower Cost of Capital and earn a higher rate of return from the project
b) The cost of capital is increased by altering the financial strategy
c) Capital is withdrawn from activities which earn inadequate returns
d) None of the above
Question 20:- As compared with national companies, multinational companies are _____.
a) equally likely to use transfer prices
b) likely to only use transfer prices in times of economic crises
c) more likely to use transfer prices
d) less likely to use transfer prices