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

is false.
33. C The production cost budget
Particulars Rs.
Prime cost (variable) 94,500
Power (semi-variable) 24,034
Administration overheads (semivariable)
17,600
Depreciation (fixed) 21,000
Total 1,57,134
Cost per unit (Rs.1,57,034 ÷ 7,500) 20.95
34. E The causes for material price variance are all the other choices other than rigid inspection
resulting in more rejections requiring additional materials for rectification. Hence, the
ans is (e).
35. A
Other choices (b), (c), (d) and (e) are not accurate.
true overhead costs Rs.37,400
Less: Applied overhead cost = (Standard
hours for true work × standard overhead
rate) = 13,200 hours × Rs.2.75
Rs.36,300
Overhead cost variance Rs.1,100 (Adverse)
36. D info on supply position of inputs is needed by the Corporate Management.
Capacity utilization and sales quantity and price realization are needed by operational
manager whereas rejections and complaints and critical operational and marketing variables
are needed by executive manager. Therefore, the ans is (d).
37. D If the transferor division has idle capacity, the transfer price can be based on marginal cost
only because fixed cost is already recovered by existing production. If there is no idle
capacity, the transfer price will be based on marginal cost plus opportunity cost. The
transferor division cannot fix up the transfer price at standard costs, total costs, full costs
plus profit and opportunity cost under the situation of unutilized capacity.
38. C A cost center is the most basic level of financial responsibility, but this does not mean that
all cost centers are small or their operations simple. The Department of National Defence is
essentially a cost center, and it certainly is neither small nor simple.
39. D A flexible budget is a series of budgets prepared for various levels of activity. It allows
adjustments of the budget to the true level of activity before comparing the budgeted
activity with true outcome. Fixed budget is a budget prepared for 1 level of activity. So
choice (d) is accurate.
40. D Zero-based budgeting begins from scratch, moves towards allocation of resources by needs,
identifies and eliminates wastage and obsolete operation, increases communication and
coordination within the firm. It also helps to create a questioning attitude of the current

Earning:   Approval pending.