INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
PAPER No. 15
COST AND FINANCIAL MANAGEMENT
Date :13.06.2018 Max. Marks :100
Time 2.00 p.m to 5.00 pm Duration 3 Hrs.
Instructions:
1. The question paper is in three parts
2. Part A is compulsory. Each sub question carries one mark. Total marks-32
3. In Part B answer any 3 questions out of 5. Each question carries 16 marks Total marks-48
4. Part C is a case study with sub questions and it is compulsory. Total marks-20
PART A (32 marks) compulsory. Each sub question carry one mark)
Q.1 Give the expansion of the following 8 marks
a. CAPM
b. WACC
c. CRISIL
d. AMFI
e. APM
f. MCV
g. ARR
h. OTCEI
Q.2 State True or False 8 marks
a Direct materials+Direct labour +Direct expenses Prime cost
b Margin of safety indicates the soundness of the business firm.
c Commercial paper is a long-term credit instrument.
d. For garment industry, cloth is an indirect material for ready- made garments.
e. Hundis are short -term credit instruments dealt with in the Indian money markets.
f The change in price levels due to inflation will distort the reliability of ratio analysis.
g. There are five major theories explaining the relationship between capital structure, cost of capital and valuation of the firm.
h. Budgets prepared for a period of 5-10 years are called short-term budgets. .
June 2018
Q.3 Fill up the blanks 8 marks
a . Break-even analysis is a technique of studying cost-volume-
b A budget is a tool of planning and
c . Costs can be classified into fixed costs and
d . DSCR is Debt service ratio.
e. Leverage ratios indicate long-term position of an organization..
f . CFAT is Cash flows after
g. bills are issued by on behalf of Government of India.
h . Money market refers to a market term funds.
Q. 4 Match the following
Column A
1. LIC
Column B
a. Infrastructure
2. CARE
b. Fixed cost
3. SEBI
c. Sunk cost
4. NYSE
d Variable cost
5. Municipal bonds
e. Capital markets
6. Manager's salary
f. Regulatory body
7. Advertising cost
g. Credit rating
8. fuel for airline
h. Investment company
PART B
Answer Any Three Questions each question carry 16 marks) 48 marks
Q 5. Write short notes on any four) 4x4 16 marks)
a Margin of Safety
b Common size statements.
c Concept of budget
d Credit rating
e Money market.
f Trend ratios.
Q6 Discuss in detail the various elements of cost.
Q 7.Discuss the meaning and significance of capital budgeting. Which are the three main obstacles to
capital budgeting?
Q8 What is the importance of working capital? Mention long-term and short-term sources of finance
available for working capital.
Q9 Explain Net Present Value method and its limitations.
A decision has to be taken between two competing proposals which require an equal investment
of Rs.1,00,000/- and are expected to generate net cash flows as under:
Years Project A Project
1 50000 20000
2 30000 24000
3 20000 36000
4 6000 50000
5 24000 16000
6 12000 8000
Cost of capital of the company is 10%.The following are the present value factor at 10% p.a.
Year 1 2 3 4 5 6
P.V.Factor at 10% 0.909 0.826 0.751 0.683 0.621 0.564
Advise the best proposal to be selected using NPV method.
PART- C (Compulsory) 20 Marks
Q 10 Calculate the prime cost, factory cost, cost of production .cost of sales and profit from the
following data:
Rs. Rs.
Direct materials 2,00,000 office stationery 1000
Direct wages 50,000 Telephone charges 250
Direct expenses 10,000 Postage and telegrams 500
Wages of foreman 5,000 Salesmen's salaries 2500
Electric power 1,000 Travelling expenses 1,000
Lighting :factory 3,000 Repairs &renewal plant 7,000
Office 1,000 Office premises 1,000
Storekeeper's wages 2,000 Carriage outwards 750
Oil &water 1,000 Transfer to reserves 1,000
Rent: Factory 10,000 Discount on shares 1,000
Office 5,000 Written off
Advertising 2,500
Depreciation plant 1,000 Warehousing charges 1,000
Office 2500 Sales 3,79,000
Consumable store 5,000 Income tax 20000
Manager's salary 10,000 Dividend 4,000
Director's fees 2,500