Symbiosis International Education Centre 2008 M.B.A Business Administration Management accounting - Question Paper

(a) Management by objective
(b) Value analysis
(c) Zero-based budgeting
(d) Activity based costing
(e) Quality costing. (1 mark)

66.The most fundamental responsibility center affected by the use of market-based transfer prices is
(a) Revenue center
(b) Expense center
(c) Profit center
(d) Investment center
(e) Production center. (1 mark)
END OF ques. PAPER
Suggested Answers
Management Accounting – II (MB162): April 2008
(e) Production center. (1 mark)

67.Which of the subsequent should be considered as a reason of material cost variance resulting from
favorable materials price variance coupled with an unfavorable materials usage variance?
(a) Labor efficiency issues
(b) Machine efficiency issues
(c) The purchase of lower than standard quality materials
(d) The purchase and use of higher than standard quality materials
(e) change of product mix. (1 mark)

68.Nitya Ltd., with a capacity of 1,25,000 units per annum manufactures a single product. The company
has furnished the subsequent income statement for the previous year:
The company desires to increase the current level of sales from 85,000 units to 95,000 units at a price
of Rs.22 per unit. If an expenditure of Rs.1,75,000 is made on advertising, the profit of the company
will be
Particulars Rs. Rs.
Sales (85,000 units @ Rs.20 per unit) 17,00,000
Cost of sales: Direct materials 3,06,000
Direct labor 2,46,500
Variable overheads 1,44,500
Fixed overheads 7,40,000
Total costs 14,37,000
Profit 2,63,000
(a) Rs.3,96,000
(b) Rs.4,80,000
(c) Rs.6,50,000
(d) Rs.7,84,000
(e) Rs.8,90,000. (2marks)

69.Assuming that the mark-up-percentage and the volume of production/sales remain constant, which of
the subsequent pricing methods will provide more profit as the fixed cost of production increases?
(a) Return on investment pricing
(b) Full cost pricing
(c) Contribution margin approach to pricing
(d) Differential cost pricing
(e) Economic theory of pricing. (1 mark)

70.The contribution or income that is forgone by not using a limited resource for its next best option
use is called
(a) Discretionary cost

Earning:   Approval pending.