Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2019 Summer 4th Sem 3549285 Management Control Systems Mcs Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2019
Subject Code: 3549285 Date:03/05/2019
Subject Name: Management Control Systems (MCS)
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 Explain the Terms
(a) Management Control System
(b) Responsibility Centre
(c) Transfer Price
(d) Performance Measurement
(e) Interactive Control
(f) EVA
(g) Goal Congruence
14
Q.2 (a) Discuss and Differentiate between Task Control & Management Control 07
(b) Explain the concept of Responsibility Centre. Describe types of
Responsibility Centre.
07
OR
(b) Explain similarities and differences between a Revenue Center and
Expense Center.
07
Q.3 (a) ?Responsibility Centers constitute the structure of management control
system and it functions as performance measurement tool of the
managers?. ? Discuss in context with Profit Center.
07
(b) Calculate Economic Value Added (EVA) with the help of the following
information of Lamda Company Ltd.
Equity : Rs. 100 lakhs
Debentures: Rs. 20 lakhs
Unsecured Loans : Rs. 30 lakhs
Profit After Tax : Rs. 15.83 lakhs
Rate of Tax : 40%
Cost of Equity Capital : 12%
Cost of Debentures : 8%
Cost of Unsecured Loan : 10%
07
OR
Q.3 (a) Explain different corporate level strategies and their implications with
respect to Management Control.
07
(b) What is transfer pricing? Why and how it is used? Explain with example. 07
Q.4 (a) Write a note on Management by Objectives (MBO). 07
(b) Describe Balanced Scorecard method. What are its advantages? 07
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Page 1 of 3
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2019
Subject Code: 3549285 Date:03/05/2019
Subject Name: Management Control Systems (MCS)
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 Explain the Terms
(a) Management Control System
(b) Responsibility Centre
(c) Transfer Price
(d) Performance Measurement
(e) Interactive Control
(f) EVA
(g) Goal Congruence
14
Q.2 (a) Discuss and Differentiate between Task Control & Management Control 07
(b) Explain the concept of Responsibility Centre. Describe types of
Responsibility Centre.
07
OR
(b) Explain similarities and differences between a Revenue Center and
Expense Center.
07
Q.3 (a) ?Responsibility Centers constitute the structure of management control
system and it functions as performance measurement tool of the
managers?. ? Discuss in context with Profit Center.
07
(b) Calculate Economic Value Added (EVA) with the help of the following
information of Lamda Company Ltd.
Equity : Rs. 100 lakhs
Debentures: Rs. 20 lakhs
Unsecured Loans : Rs. 30 lakhs
Profit After Tax : Rs. 15.83 lakhs
Rate of Tax : 40%
Cost of Equity Capital : 12%
Cost of Debentures : 8%
Cost of Unsecured Loan : 10%
07
OR
Q.3 (a) Explain different corporate level strategies and their implications with
respect to Management Control.
07
(b) What is transfer pricing? Why and how it is used? Explain with example. 07
Q.4 (a) Write a note on Management by Objectives (MBO). 07
(b) Describe Balanced Scorecard method. What are its advantages? 07
Page 2 of 3
OR
Q.4 (a) From the following data of Product A, B and C of Maharaj Corporations
calculate the Selling Price Variance
Particulars Product A Product B Product C
Actual Sales
Volume
1,00,000
2,00,000
1,50,000
Actual Price
per unit
Rs.0.90
Rs.2.05
Rs.2.50
Standard
Price
Rs.1
Rs.2
Rs.3
07
(b) What are the key consideration of determination of transfer price in
Multinational organizations
07
Q.5
CASE STUDY:
Nataraj Company is a highly diversified company which grants its
division executives a significant amount of authority in operating the
divisions. Each division is responsible for its own sales, pricing,
production, and cost of operations and the management of accounts
receivables, inventories, accounts payables and use of existing facilities.
Cash is managed by Corporate headquarters, all cash in excess of normal
operating needs of the divisions is transferred periodically to corporate
headquarters for redistributions or investment.
The division executives are responsible for presenting requests to
corporate management for investment projects. The proposals are
analyzed and documented at corporate headquarters. The final decision to
commit funds to acquire equipment, to expand existing facilities, or for
other investment projects is necessitated by Nataraj?s Capital allocation
policy.
The corporation evaluates the performance of division executives by the
return on investment (ROI) measures. The asset base is comprised of fixed
assets employed plus working capital exclusive of cash.
The ROI performance of division executive is the most important
appraisal factor for salary changes. In addition, the annual performance
bonus is based on the ROI results, with increase in ROI having a
significant impact on the amount of the bonus.
The Nataraj Corporation adopted the ROI performance measure and
related compensation procedures about 10 years ago. The company did so
to increase the awareness of divisional management of the importance of
the profit asset relationship and to provide additional incentive to the
division executives to seek investment opportunities. The company seems
to have benefited from the program. The ROI for the corporation as a
whole increased during the first years of the program. Although the ROI
has continued to grow in each division, the corporate ROI has declined in
recent years. The corporation has accumulated a sizeable amount of cash
and short ? term marketable securities in the past 3 years.
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Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? SUMMER 2019
Subject Code: 3549285 Date:03/05/2019
Subject Name: Management Control Systems (MCS)
Time: 10:30 AM To 01:30 PM Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Q.1 Explain the Terms
(a) Management Control System
(b) Responsibility Centre
(c) Transfer Price
(d) Performance Measurement
(e) Interactive Control
(f) EVA
(g) Goal Congruence
14
Q.2 (a) Discuss and Differentiate between Task Control & Management Control 07
(b) Explain the concept of Responsibility Centre. Describe types of
Responsibility Centre.
07
OR
(b) Explain similarities and differences between a Revenue Center and
Expense Center.
07
Q.3 (a) ?Responsibility Centers constitute the structure of management control
system and it functions as performance measurement tool of the
managers?. ? Discuss in context with Profit Center.
07
(b) Calculate Economic Value Added (EVA) with the help of the following
information of Lamda Company Ltd.
Equity : Rs. 100 lakhs
Debentures: Rs. 20 lakhs
Unsecured Loans : Rs. 30 lakhs
Profit After Tax : Rs. 15.83 lakhs
Rate of Tax : 40%
Cost of Equity Capital : 12%
Cost of Debentures : 8%
Cost of Unsecured Loan : 10%
07
OR
Q.3 (a) Explain different corporate level strategies and their implications with
respect to Management Control.
07
(b) What is transfer pricing? Why and how it is used? Explain with example. 07
Q.4 (a) Write a note on Management by Objectives (MBO). 07
(b) Describe Balanced Scorecard method. What are its advantages? 07
Page 2 of 3
OR
Q.4 (a) From the following data of Product A, B and C of Maharaj Corporations
calculate the Selling Price Variance
Particulars Product A Product B Product C
Actual Sales
Volume
1,00,000
2,00,000
1,50,000
Actual Price
per unit
Rs.0.90
Rs.2.05
Rs.2.50
Standard
Price
Rs.1
Rs.2
Rs.3
07
(b) What are the key consideration of determination of transfer price in
Multinational organizations
07
Q.5
CASE STUDY:
Nataraj Company is a highly diversified company which grants its
division executives a significant amount of authority in operating the
divisions. Each division is responsible for its own sales, pricing,
production, and cost of operations and the management of accounts
receivables, inventories, accounts payables and use of existing facilities.
Cash is managed by Corporate headquarters, all cash in excess of normal
operating needs of the divisions is transferred periodically to corporate
headquarters for redistributions or investment.
The division executives are responsible for presenting requests to
corporate management for investment projects. The proposals are
analyzed and documented at corporate headquarters. The final decision to
commit funds to acquire equipment, to expand existing facilities, or for
other investment projects is necessitated by Nataraj?s Capital allocation
policy.
The corporation evaluates the performance of division executives by the
return on investment (ROI) measures. The asset base is comprised of fixed
assets employed plus working capital exclusive of cash.
The ROI performance of division executive is the most important
appraisal factor for salary changes. In addition, the annual performance
bonus is based on the ROI results, with increase in ROI having a
significant impact on the amount of the bonus.
The Nataraj Corporation adopted the ROI performance measure and
related compensation procedures about 10 years ago. The company did so
to increase the awareness of divisional management of the importance of
the profit asset relationship and to provide additional incentive to the
division executives to seek investment opportunities. The company seems
to have benefited from the program. The ROI for the corporation as a
whole increased during the first years of the program. Although the ROI
has continued to grow in each division, the corporate ROI has declined in
recent years. The corporation has accumulated a sizeable amount of cash
and short ? term marketable securities in the past 3 years.
Page 3 of 3
The corporate management is concerned about the increase in the short-
term marketable securities. A recent article in a financial publications
suggested that the use of ROI was overemphasized by some companies,
with results similar to those experienced by Nataraj.
(a) Describe the specific actions divisions managers might have taken to
cause the ROI to grow in each division but decline for the company.
Illustrate your explanation with appropriate examples.
07
(b)
What changes could be made in Nataraj Company?s Corporation policy to
avoid this problem? Explain your answer.
07
OR
(a) Explain using the concepts of goal congruence and motivation of division
executives, how Nataraj?s overemphasis on the use of the ROI measure
might result in the recent decline in the company?s return on investment
and the increase in cash and short-term marketable securities.
07
(b)
What are the Other ways (Control Strategy) that can be used by the
Nataraj Company to balance the performance of the organization rather to
stay emphasized on ROI?
07
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This post was last modified on 19 February 2020