M.B.A-M.B.A 3rd Sem 302 : MANAGEMENT CONTROL SYSTEMS(University of Pune, Pune-2013)

Time : 3 Hours]                                                                                        [Max. Marks : 70

Instructions :

1)      Q.No. 7 is compulsory.

2)      Attempt any 4 questions from Q.No. 1 to Question No. 6.

3)      All questions carry equal marks.

Q1) “Strategic planning, operational control and management control are

interrelated with each other”. Comment.                                                     [14]

Q2) “Performance measurement is an important aspect of management control

system”. Do you agree? Justify your answer with suitable examples. [14]

Q3) What is zero base budget? Explain the basic steps involved in zero base

budgeting and effectiveness of it.                                                                   [14]

Q4) “Balance score card attempts to create a blend of financial and non financial

as well as internal and external measures in balanced manner”. Explain. [14]

Q5) “Designing and implementation of management control system in a service

organization is more complex and challenging than that of manufacturing

organisation”. Comment.                                                                      [14]

Q6) Write short notes on (any two) :                                                     [14]

a) Business level and corporate level strategic planning.

b) Internal Audit Vs External Audit.

c) Formal and Informal control system.

d) Goal congruence.

Q7) Apple Ltd is having two divisions R1 and R2. R1 produces product P1 and R2 produces P2. R1 sales its product to outside buyers as well as to R2. The manager of R2 accepted the price charged by R1. However due to changing situations now he shows his inability to continue with the same price. A meeting is scheduled between the managers of R1 and R2 and you are required to furnish certain information to manager of R1. Division R1 has been selling 50,000 units in open market and supplying 10,000 units to R2 at Rs. 20 per unit. Division R1 incurs variable cost of Rs. 12 per unit and fixed cost of Rs. 2,25,000. Division R2 expects a price of Rs. 18 per unit. If he reduces the sales of its products to Division R2, Division R1 can avoid Rs. 40,000 on fixed costs and Rs. 1,80,000 on assets. Manager of Division R1 judged its performance primarly on the basis of rate of return on investment. The total assets of the division R1 are Rs. 9,50,000.

As a controller of the firm you are requested to advice on.

a) Should the manager of division R1 transfer its products to division R2 at

price of Rs. 18 per unit?

b) Lowest price that the division R1 should accept.

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