FM02 Online Exam Assignment AIMA 2020

Subject Code: FM02

Subject Name: Management Control Systems

Component name: Term end    

Question 1:- Marginal costs and differential cost is same if:

1. a) Variable cost remains constant
2. b) Fixed cost remains constant
3. c) Fixed as well as variable cost remain constant
4. d) None of these

Question 2:- Important components of agency cost are:

1. a) Monitoring
2. b) Binding
3. c) Opportunity cost
4. d) All of these

Question 3:- A manager, who is responsible for both cost and revenues belongs to department of:

1. a) Cost center
2. b) Revenue center
3. c) Profit center
4. d) Investment center

Question 4:- Costs which incur during temporary closure of business operation are known as:

1. a) Variable costs
2. b) Abandonment costs
3. c) Shutdown costs
4. d) None of these

Question 5:- The part of fixed cost which can not be recovered is called:

1. a) Escapable costs
2. b) Suspension costs
3. c) Special costs
4. d) Sunk costs

Question 6:- Which of the following will not result into flow of funds?

1. a) Issue of shares for cash
2. b) Cash sale of goods
3. c) Purchase of machine by issue of shares
4. d) Collection from debtors

Question 7:- If there is no change in fixed cost at different levels of output:

1. a) Marginal costs = Differential cost
2. b) Marginal costs > Differential cost
3. c) Marginal costs < Differential cost
4. d) None of these

Question 8:- Performance ratios are also known as:

1. a) Efficiency ratios
2. b) Activity ratios
3. c) Turnover ratios
4. d) All of these

Question 9:- Product profitability is best judged through:

1. a) P/V Ratio
2. b) Gross Profit Ratio
3. c) Operating Leverage
4. d) None of these

Question 10:- Managers using capacity planning do not make:

1. a) Pricing decision
2. b) Marketing decision
3. c) Financing
4. d) Cost budgeting

Question 11:- If fixed cost is Rs. 25000, required profit is Rs. 5000 and P/V ratio is 40 percent, the desired sales will be:

1. a) 75000
2. b) 37500
3. c) 42500
4. d) 62500

Question 12:- An approach in which company under-costs it`s one product and over-costs at least one product is classified as:

1. a) Service-cost across subsidizing
2. b) Product cost cross subsidizing
3. c) Product-price cross subsidizing
4. d) Product cross subsidizing

Question 13:- Shutdown point is that at which:

1. a) Total revenue = Total cost
2. b) Price = Marginal cost
3. c) Price = Variable cost
4. d) None of these

Question 14:- An strategic business unit with declining market, declining market, cash flows and profits is termed as:

1. a) Cash cows
2. b) Question marks
3. c) Stars
4. d) Dogs

Question 15:- Find Profit if Margin of safety is Rs 75000 and P/V ratio is 40%.

1. a) 37500
2. b) 30000
3. c) 42500
4. d) 32500

Question 16:- Product which requires low amount of resources, but incur high per unit cost is classified as:

1. a) Product under costing
2. b) Product over costing
3. c) Expected under cost
4. d) None of these

Question 17:- Part of master budget, which covers capital expenditures, budgeted statement of cash flows and balance sheet is classified as:

1. a) Financial budget
2. b) Capital budget
3. c) Cash budget
4. d) Balanced budget

Question 18:- If opportunity cost per unit is Rs. 45, incremental cost per unit is Rs. 65, then minimum transfer price will be:

1. a) 20
2. b) 45
3. c) 65
4. d) 110

Question 19:- An approach used for choosing capacity level, having no beginning inventory is classified as:

1. a) Write off variance approach
2. b) Write in variance approach
3. c) Adjusted variance approach
4. d) Unadjusted variance approach

Question 20:- Flow of goods and services, from start of gathering materials until delivery of products, is known as:

1. a) Flow chart analysis
2. b) Supply chain analysis
3. c) Resource chain analysis
4. d) Acquiring analysis

Case Study

Pronto World produces three products – A, B and C by using a special type of material X. The records of store and finance department show that for every 100 tonne inventory of material X, firm gets 50 tonnes output of A, 30 tonnes output of B, and 15 tonnes output of C; while 5 tonnes of material becomes waste. The relevant cost per tonne of input for the coming year are budgeted to be: Cost of raw material – Rs. 20, and Variable processing costs – Rs. 10. The variable marketing costs are budgeted @ 10 percent of sales value. Annual budgeted fixed overheads are: Manufacturing OH – Rs. 40000, Marketing OH – Rs. 30000, and Administration OH – Rs. 20000. The firm intends to process 10000 tonnes of material X in coming year. It sells product A, B, and C at a price of Rs. 40, Rs. 60, and Rs. 80 respectively.

Question 21:- Based on given information, the expected sales of the firm will be:

1. a) 530000
2. b) 500000
3. c) 600000
4. d) 450000

Question 22:- The P/V ratio of the firm will be:

1. a) 20 percent
2. b) 25 percent
3. c) 40 percent
4. d) 30 percent

Question 23:- The expected net profit of the firm will be:

1. a) 400000
2. b) 30000
3. c) 60000
4. d) 50000

Question 24:- The firm will achieve break even point at:

1. a) 6000 tonnes
2. b) 3000 tonnes
3. c) 4500 tonnes
4. d) 7500 tonnes

Question 25:- What maximum price per tonne firm can pay for raw material if its target rate of return on capital employed of Rs. 500000 is 15 percent. The input remains same at 10000 units.

17. a) 17.50
18. b) 18.00
19. c) 18.50
20. d) 20.00