All India Management Association (AIMA) 2007 M.B.A Marketing Management Accounting for ision Making - II - Question Paper
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(d) The price representing the cash outflows of the supplying division plus the contribution to the supplying division from an outside sale
(e) The price based on variable cost plus a lump sum.
( 1 mark)
43. The opportunity cost of making a component in a factory with no excess capacity is the
(a) Variable manufacturing cost of the component
(b) Cost of production provided up in order to manufacture the component
(c) Net benefit provided up from the best option use of the capacity
(d) Total manufacturing cost of the component
(e) Fixed manufacturing cost of the component.
( 1 mark)
44. Which of the subsequent is false with regard to Economic Value Added (EVA)?
(a) The calculation of EVA involves a complex procedure
(b) EVA can be improved by downsizing profitable operations
(c) EVA is a residual income measure that subtracts the cost of capital from the operating profit generated by a business
(d) EVA can be used for making day-to-day decisions as well as for strategic planning
(e) EVA is 1 variation of residual income with adjustments in the method of computation.
( 1 mark)
45. Which of the subsequent is actual if the decision for establishment of branch sales office is chosen in comparison with employing selling agents?
(a) Only variable cost is higher
(b) Both fixed costs and variable costs are higher
(c) The level of variable cost is more and fixed cost is less
(d) The level of variable cost is less and fixed cost is more
(e) The levels of both variable costs and fixed costs are less.
( 1 mark)
46. Market Value Added is the difference ranging from
(a) Market value of invested capital and Net value added
(b) Net value added and Economic value added
(c) Book value of invested capital and Economic value added
(d) Market value of invested capital and Gross value added
(e) Market value of invested capital and Book value of invested capital.
( 1 mark)
47. Varoon Ltd. has received an order for the supply of 2,00,000 units of its product Y. There is enough capacity available but additional balancing equipment have to be purchased for Rs.80,000. The total costs of manufacturing the product will be Rs.5,47,940. Working capital needed will be 50% of the sales value. If the company expects a return of 20% on the additional capital requirement for the order, the price of the order should be
(a) Rs.2,29,560
(b) Rs.3,72,140
(c) Rs.6,26,600
(d) Rs.7,89,995
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