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

(d) Supply position of inputs
(e) Critical operational and marketing variables. (1 mark)

37.If the transferor division has an idle capacity for a product then the transfer price can be based on
(a) Standard costs
(b) Total costs
(c) Full costs plus profit
(d) Marginal cost
(e) Opportunity cost. (1 mark)
(e) Opportunity cost. (1 mark)

38.The smallest segment of activity or area of responsibility for which costs are accumulated is called
(a) Revenue center
(b) Profit center
(c) Cost center
(d) Investment center
(e) Contribution center. (1 mark)

39.The basic difference ranging from a fixed budget and a flexible budget is that a
(a) Flexible budget considers only variable costs but a fixed budget considers all costs
(b) Flexible budget allows management latitude in meeting goals whereas a fixed budget is based
on a fixed standard
(c) Fixed budget is for an entire production facility but a flexible budget is applicable to single
department only
(d) Fixed budget is based on 1 specific level of production and a flexible budget can be prepared
for any production level within a relevant range
(e) Fixed budget considers only variable costs, whereas flexible budget considers only fixed costs. (1 mark)

40.Which of the subsequent is false in respect of zero-based budgeting?
(a) It begins from scratch
(b) It represents a move towards allocation of resources by need
(c) It identifies and eliminates wastage and obsolete operations
(d) It does not create a questioning attitude of the current practice of the organization
(e) It increases communication and coordination within the organization. (1 mark)

41.Consider the subsequent data of Soft Plastics Ltd., for production and sales of 64,000 units of a product:
The capital employed is Rs.76,500. If the company desires to earn a profit of 40% (ignore taxation) on
capital employed, the selling price per unit of the product would be
Particulars Rs.
Material 2,86,800
Labor 1,89,000
Overheads 3,80,000
(a) Rs.14.57
(b) Rs.20.39
(c) Rs.13.85
(d) Rs.18.72
(e) Rs.13.37. (2marks)

42.Which of the subsequent statements is false with respect to transfer pricing?

Earning:   Approval pending.