Download GTU (Gujarat Technological University) MBA (Master of Business Administration) 2018 Winter 4th Sem 2840007 Management Control System Previous Question Paper
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? WINTER 2018
Subject Code: 2840007 Date:05/12/2018
Subject Name: Management Control System
Time: 02:30 Pm To 05:30 Pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Marks
Q.1 (a) Objective Questions 6
1. Organizational control systems:
A. always penalize ethical decision
making.
C rely entirely on formal controls
B. may help to embed corporate
social responsiveness.
D. are just another name for
budgeting
2. Method of pricing, when two separate pricing methods are used to price
transfer of products from one subunit to another, is called
A. Dual Pricing C. Congruent Pricing
B. Functional Pricing D. Optimal Pricing
3. Per unit opportunity cost to selling subunit of company, is added into per unit
incremental cost is incurred at point of transfer to calculate
A. Minimum Operating cost C. Maximum Transfer price
B. Maximum Operating costs D. Minimum Transfer price
4. Which of the following term is used to describe an organization subunit
whose managers are held responsible for costs and in which the relationship
between costs and output is well defined?
A. Cost center C. Profit
B. Revenue center D. Investment center
5. The objective of Value chain analysis is
A. To ascertain the cost of each
activity
C. To control the cost of each
activity
B. To make each activity cost
effective.
D. To recognize the cost incurred
for each activity
6. Zero-based budgeting
A. Is an approach to budgeting that
solely applies to public sector
organizations
C.Is an approach in which managers
are required to justify all budgeted
expenditures, not just changes in the
budget from the previous year
B. Is best carried out on a quarterly
basis
D. Should be undertaken on a
routine basis
Q.1 (b) 1) Core Competency
2) Zero Base Budgeting
3) Key Success Factor
4) Balance Score Card
04
Q.1 (c) ?Management Control System plays crucial role in the success of business?
Discuss the statement with example.
04
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1
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? WINTER 2018
Subject Code: 2840007 Date:05/12/2018
Subject Name: Management Control System
Time: 02:30 Pm To 05:30 Pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Marks
Q.1 (a) Objective Questions 6
1. Organizational control systems:
A. always penalize ethical decision
making.
C rely entirely on formal controls
B. may help to embed corporate
social responsiveness.
D. are just another name for
budgeting
2. Method of pricing, when two separate pricing methods are used to price
transfer of products from one subunit to another, is called
A. Dual Pricing C. Congruent Pricing
B. Functional Pricing D. Optimal Pricing
3. Per unit opportunity cost to selling subunit of company, is added into per unit
incremental cost is incurred at point of transfer to calculate
A. Minimum Operating cost C. Maximum Transfer price
B. Maximum Operating costs D. Minimum Transfer price
4. Which of the following term is used to describe an organization subunit
whose managers are held responsible for costs and in which the relationship
between costs and output is well defined?
A. Cost center C. Profit
B. Revenue center D. Investment center
5. The objective of Value chain analysis is
A. To ascertain the cost of each
activity
C. To control the cost of each
activity
B. To make each activity cost
effective.
D. To recognize the cost incurred
for each activity
6. Zero-based budgeting
A. Is an approach to budgeting that
solely applies to public sector
organizations
C.Is an approach in which managers
are required to justify all budgeted
expenditures, not just changes in the
budget from the previous year
B. Is best carried out on a quarterly
basis
D. Should be undertaken on a
routine basis
Q.1 (b) 1) Core Competency
2) Zero Base Budgeting
3) Key Success Factor
4) Balance Score Card
04
Q.1 (c) ?Management Control System plays crucial role in the success of business?
Discuss the statement with example.
04
2
Q.2 (a) What is Goal Congruence? Discuss factors affecting Goal congruence. 07
Q.2 (b) What do you mean by Responsibility center? Explain the types of
responsibility center
07
OR
Q.2 (b) Explain Profit center. Discuss the condition for delegating business unit to be
declare as profit center along with Pros & cons.
07
Q.3 (a) Explain fundamentals principles of Transfer pricing. And discuss Ideal
situation for implementing Transfer pricing.
07
Q.3 (b) Define EVA and ROI. Explain advantages and disadvantages of EVA and
ROI and discuss difference between EVA and ROI
07
OR
Q.3 (a) What do you mean by Transfer pricing. And discuss various methods for
transfer pricing.
07
Q.3 (b) Suppose your company fixes The Inter- divisional transfer prices for its
products on the basis of cost plus a return on investment in the division. The
budget for Division ? X for financial year 2016 -17 appears as under:
Investment in Division ?X? Amount
Fixed Assets 500000
Debtors 200000
Current Assets 300000
Annual cost of the Division 800000
Variable cost p.u. 10
Budgeted volume per year 400000 units
Desired ROI 28%
Determine the price for Division ?X?.
07
Q.4 (a) What is Interactive Control? Discuss control as a Strategy formulation and
implementation tool.
07
Q.4 (b) P & G uses a traditional standard costing system to control costs &
established following material standards. Compute Material variances. (a)
Material price variance (b) Material Usage variance (c) Material Cost
variance.
Actual Quantity - 2500 units
Actual price per unit - ? 3
Budgeted Quantity - 2400 units
Budgeted price per unit - ? 2.50
07
OR
Q.4 (a) Differentiate between application of MCS in Manufacturing organization and
Service organization.
07
Q.4 (b) With the following data for 60% capacity. Prepare budget for production
80% and 100%.
Production at 60% is of 600 units
Material per unit ? 100
Labour per unit ? 40
Expenses per unit ? 10
Factory expenses ? 40000 [40% fixed]
Administration expenses ? 30000 [60% fixed]
07
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1
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? WINTER 2018
Subject Code: 2840007 Date:05/12/2018
Subject Name: Management Control System
Time: 02:30 Pm To 05:30 Pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Marks
Q.1 (a) Objective Questions 6
1. Organizational control systems:
A. always penalize ethical decision
making.
C rely entirely on formal controls
B. may help to embed corporate
social responsiveness.
D. are just another name for
budgeting
2. Method of pricing, when two separate pricing methods are used to price
transfer of products from one subunit to another, is called
A. Dual Pricing C. Congruent Pricing
B. Functional Pricing D. Optimal Pricing
3. Per unit opportunity cost to selling subunit of company, is added into per unit
incremental cost is incurred at point of transfer to calculate
A. Minimum Operating cost C. Maximum Transfer price
B. Maximum Operating costs D. Minimum Transfer price
4. Which of the following term is used to describe an organization subunit
whose managers are held responsible for costs and in which the relationship
between costs and output is well defined?
A. Cost center C. Profit
B. Revenue center D. Investment center
5. The objective of Value chain analysis is
A. To ascertain the cost of each
activity
C. To control the cost of each
activity
B. To make each activity cost
effective.
D. To recognize the cost incurred
for each activity
6. Zero-based budgeting
A. Is an approach to budgeting that
solely applies to public sector
organizations
C.Is an approach in which managers
are required to justify all budgeted
expenditures, not just changes in the
budget from the previous year
B. Is best carried out on a quarterly
basis
D. Should be undertaken on a
routine basis
Q.1 (b) 1) Core Competency
2) Zero Base Budgeting
3) Key Success Factor
4) Balance Score Card
04
Q.1 (c) ?Management Control System plays crucial role in the success of business?
Discuss the statement with example.
04
2
Q.2 (a) What is Goal Congruence? Discuss factors affecting Goal congruence. 07
Q.2 (b) What do you mean by Responsibility center? Explain the types of
responsibility center
07
OR
Q.2 (b) Explain Profit center. Discuss the condition for delegating business unit to be
declare as profit center along with Pros & cons.
07
Q.3 (a) Explain fundamentals principles of Transfer pricing. And discuss Ideal
situation for implementing Transfer pricing.
07
Q.3 (b) Define EVA and ROI. Explain advantages and disadvantages of EVA and
ROI and discuss difference between EVA and ROI
07
OR
Q.3 (a) What do you mean by Transfer pricing. And discuss various methods for
transfer pricing.
07
Q.3 (b) Suppose your company fixes The Inter- divisional transfer prices for its
products on the basis of cost plus a return on investment in the division. The
budget for Division ? X for financial year 2016 -17 appears as under:
Investment in Division ?X? Amount
Fixed Assets 500000
Debtors 200000
Current Assets 300000
Annual cost of the Division 800000
Variable cost p.u. 10
Budgeted volume per year 400000 units
Desired ROI 28%
Determine the price for Division ?X?.
07
Q.4 (a) What is Interactive Control? Discuss control as a Strategy formulation and
implementation tool.
07
Q.4 (b) P & G uses a traditional standard costing system to control costs &
established following material standards. Compute Material variances. (a)
Material price variance (b) Material Usage variance (c) Material Cost
variance.
Actual Quantity - 2500 units
Actual price per unit - ? 3
Budgeted Quantity - 2400 units
Budgeted price per unit - ? 2.50
07
OR
Q.4 (a) Differentiate between application of MCS in Manufacturing organization and
Service organization.
07
Q.4 (b) With the following data for 60% capacity. Prepare budget for production
80% and 100%.
Production at 60% is of 600 units
Material per unit ? 100
Labour per unit ? 40
Expenses per unit ? 10
Factory expenses ? 40000 [40% fixed]
Administration expenses ? 30000 [60% fixed]
07
3
Q.5 IBM Electronic makes three products P, Q and R. P is for an exclusive
segment. Q is for upper class, not so exclusive segment. R is for mass
segment. They have different brand names and are sold through different
distribution channels. IBM Electronics consider P, Q and R as separate
divisions. The manufacturing lines are also divisionalized. But some
components are common between them. IBM centrally buys some of these
components and allows each of the divisions to specialize in the manufacture
of particular components which are them not purchased from outside sources.
These decisions to make these components are made for many complex
reasons. From past records, it was noticed, Divisions P innovates in new
products which are then incorporated by Divisions Q and R. conversely,
Division R has a track record of excellent process innovations that reduce
costs and these are picked up by P and Q.
Questions:
1) Should P, Q and R be profit centers? If yes, should they provide a
bonus on their individual profits? If no how do we encourage them
for improvement?
2) What should the transfer price policy be between them for
components or cost centers?
3) Should central purchase costs be transferred to the divisions? If yes
what should be the basis?
14
OR
Q.5
The SBU in New Semiconductor Product company was engaged in the
design and manufacturing of special-purpose semiconductor assemblies
called hybrids. This product involved mounting and interconnecting active
and passive microelectronic components within a single, small package. At
the time of the preparation of the 1990 strategic plan, a decision was made to
transfer responsibilities for these hybrids to this SBU. The SBU then
assumed responsibility for maintaining and expanding hybrid products. At
mid-year, contacts with a major existing customer indicated possible interest
in a very large quantity of hybrids for controlling small electric motors. The
product manager became very interested in capitalizing on this opportunity to
expand sales, consistent with the new business unit responsibility. After
exploratory conservations with the customer, it became apparent to the
product manger that capital investment of over $ 1 million would be required
to procure the production equipment to meet these new production
requirements. Since this opportunity was not foreseen when the previous
strategic plan was revised, a strategic investment proposal was normally
required.
The product manger used a series of informal channels to alert upper
management to the possibility of this investment. She also prepared a
preliminary version of the CEA for review, subject to refining the final
details upon continuing conservations with the customer. In preparing this
preliminary version of CEA, the product manager took care to ensure that the
financial analysis was well supported and of high quality. In turn, upper
management began to alert the CEO as opportunity presented itself. The
proposal was considered highly attractive informal discussions at this stage
because of the general reputation of the customer. Also, expansion of this
product line was consistent with the new strategic charter of the business
unit. Moreover, economic returns were promising.
14
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1
Seat No.: ________ Enrolment No.___________
GUJARAT TECHNOLOGICAL UNIVERSITY
MBA ? SEMESTER 4 ? EXAMINATION ? WINTER 2018
Subject Code: 2840007 Date:05/12/2018
Subject Name: Management Control System
Time: 02:30 Pm To 05:30 Pm Total Marks: 70
Instructions:
1. Attempt all questions.
2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.
Marks
Q.1 (a) Objective Questions 6
1. Organizational control systems:
A. always penalize ethical decision
making.
C rely entirely on formal controls
B. may help to embed corporate
social responsiveness.
D. are just another name for
budgeting
2. Method of pricing, when two separate pricing methods are used to price
transfer of products from one subunit to another, is called
A. Dual Pricing C. Congruent Pricing
B. Functional Pricing D. Optimal Pricing
3. Per unit opportunity cost to selling subunit of company, is added into per unit
incremental cost is incurred at point of transfer to calculate
A. Minimum Operating cost C. Maximum Transfer price
B. Maximum Operating costs D. Minimum Transfer price
4. Which of the following term is used to describe an organization subunit
whose managers are held responsible for costs and in which the relationship
between costs and output is well defined?
A. Cost center C. Profit
B. Revenue center D. Investment center
5. The objective of Value chain analysis is
A. To ascertain the cost of each
activity
C. To control the cost of each
activity
B. To make each activity cost
effective.
D. To recognize the cost incurred
for each activity
6. Zero-based budgeting
A. Is an approach to budgeting that
solely applies to public sector
organizations
C.Is an approach in which managers
are required to justify all budgeted
expenditures, not just changes in the
budget from the previous year
B. Is best carried out on a quarterly
basis
D. Should be undertaken on a
routine basis
Q.1 (b) 1) Core Competency
2) Zero Base Budgeting
3) Key Success Factor
4) Balance Score Card
04
Q.1 (c) ?Management Control System plays crucial role in the success of business?
Discuss the statement with example.
04
2
Q.2 (a) What is Goal Congruence? Discuss factors affecting Goal congruence. 07
Q.2 (b) What do you mean by Responsibility center? Explain the types of
responsibility center
07
OR
Q.2 (b) Explain Profit center. Discuss the condition for delegating business unit to be
declare as profit center along with Pros & cons.
07
Q.3 (a) Explain fundamentals principles of Transfer pricing. And discuss Ideal
situation for implementing Transfer pricing.
07
Q.3 (b) Define EVA and ROI. Explain advantages and disadvantages of EVA and
ROI and discuss difference between EVA and ROI
07
OR
Q.3 (a) What do you mean by Transfer pricing. And discuss various methods for
transfer pricing.
07
Q.3 (b) Suppose your company fixes The Inter- divisional transfer prices for its
products on the basis of cost plus a return on investment in the division. The
budget for Division ? X for financial year 2016 -17 appears as under:
Investment in Division ?X? Amount
Fixed Assets 500000
Debtors 200000
Current Assets 300000
Annual cost of the Division 800000
Variable cost p.u. 10
Budgeted volume per year 400000 units
Desired ROI 28%
Determine the price for Division ?X?.
07
Q.4 (a) What is Interactive Control? Discuss control as a Strategy formulation and
implementation tool.
07
Q.4 (b) P & G uses a traditional standard costing system to control costs &
established following material standards. Compute Material variances. (a)
Material price variance (b) Material Usage variance (c) Material Cost
variance.
Actual Quantity - 2500 units
Actual price per unit - ? 3
Budgeted Quantity - 2400 units
Budgeted price per unit - ? 2.50
07
OR
Q.4 (a) Differentiate between application of MCS in Manufacturing organization and
Service organization.
07
Q.4 (b) With the following data for 60% capacity. Prepare budget for production
80% and 100%.
Production at 60% is of 600 units
Material per unit ? 100
Labour per unit ? 40
Expenses per unit ? 10
Factory expenses ? 40000 [40% fixed]
Administration expenses ? 30000 [60% fixed]
07
3
Q.5 IBM Electronic makes three products P, Q and R. P is for an exclusive
segment. Q is for upper class, not so exclusive segment. R is for mass
segment. They have different brand names and are sold through different
distribution channels. IBM Electronics consider P, Q and R as separate
divisions. The manufacturing lines are also divisionalized. But some
components are common between them. IBM centrally buys some of these
components and allows each of the divisions to specialize in the manufacture
of particular components which are them not purchased from outside sources.
These decisions to make these components are made for many complex
reasons. From past records, it was noticed, Divisions P innovates in new
products which are then incorporated by Divisions Q and R. conversely,
Division R has a track record of excellent process innovations that reduce
costs and these are picked up by P and Q.
Questions:
1) Should P, Q and R be profit centers? If yes, should they provide a
bonus on their individual profits? If no how do we encourage them
for improvement?
2) What should the transfer price policy be between them for
components or cost centers?
3) Should central purchase costs be transferred to the divisions? If yes
what should be the basis?
14
OR
Q.5
The SBU in New Semiconductor Product company was engaged in the
design and manufacturing of special-purpose semiconductor assemblies
called hybrids. This product involved mounting and interconnecting active
and passive microelectronic components within a single, small package. At
the time of the preparation of the 1990 strategic plan, a decision was made to
transfer responsibilities for these hybrids to this SBU. The SBU then
assumed responsibility for maintaining and expanding hybrid products. At
mid-year, contacts with a major existing customer indicated possible interest
in a very large quantity of hybrids for controlling small electric motors. The
product manager became very interested in capitalizing on this opportunity to
expand sales, consistent with the new business unit responsibility. After
exploratory conservations with the customer, it became apparent to the
product manger that capital investment of over $ 1 million would be required
to procure the production equipment to meet these new production
requirements. Since this opportunity was not foreseen when the previous
strategic plan was revised, a strategic investment proposal was normally
required.
The product manger used a series of informal channels to alert upper
management to the possibility of this investment. She also prepared a
preliminary version of the CEA for review, subject to refining the final
details upon continuing conservations with the customer. In preparing this
preliminary version of CEA, the product manager took care to ensure that the
financial analysis was well supported and of high quality. In turn, upper
management began to alert the CEO as opportunity presented itself. The
proposal was considered highly attractive informal discussions at this stage
because of the general reputation of the customer. Also, expansion of this
product line was consistent with the new strategic charter of the business
unit. Moreover, economic returns were promising.
14
4
On the basis of this preliminary atmosphere of approval, the investment was
included in the capital plan even though it was not included in the strategic
plan prepared only a few months earlier. The actual investment was subject
to the preparation and approval of the CEA. With all of this pre- warning,
coupled with very favorable investment characteristics, the CEA worked its
way up the approval latter very quickly. It was signed by the president of the
company one month after its preparation.
Questions:
1) What actual role did the formal approval process play in the actual
approval of this project?
2) Who provided the impetus for this project?
*************
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This post was last modified on 19 February 2020