INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
PAPER No. 15
COST AND FINANCIAL MANAGEMENT
Date :13.12.2017 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)
Q1. Select the most appropriate answer from the options given below:
1. Profit maximization objective ignores-
a. Time factor
b. Effective allocationof resources
c .Optiimum utilizationof resources
Maximum social welfare
2 Which one of the following is not a ratio in measuring short-term solvency position of an
Organization
a. Current ratio
b. Capital gearing ratio
c. Quick ratio
d. Absolute liquid ratio
3. The capital market is regulated by
a. UTI
b. RBI
c.SEBI
d IDBI.
4. On the basis of time, budget may be classified into which of the following categories
a. Short-term
b. Long-term
c. current
d. all three above
5. One of the following is not a source of long term funds-
a. Working Capital
b. Warrants
c. Equity shares
d. Debentures
Dec 2017
6. The number of major theories explaining the relatioship between capital structure,cost of
capital and valuation of the firm is
a.two
b.four
c.five
d.six
7. Debtor turnover ratio is credit sales divided by
a. Average stock
b. Sales
c. Average debtors
d Average creditors
8 One of the following is an Investment company
a. ICRA
b. CARE
c. CRISIL
d. LIC
Q. 2. State whether the followiong statements are true or false:
a. The term overhead includes indirect material expenses
b. Break even point is a point where the total sales or revenue are equal to total costs.
c Capital structure is that part of financial structure which represents short-term
sources.
d. IRR does not consider the time value of money.
e Revenue variance includes sales variance.
f. Cost centre is also known as responsibility centre
g. Essentially,money market refers to a market for long-term funds.
h. Commercial paper is a long-term source of finance.
Q3. Fill in the blanks with appropriate words:
a. Costs that cannot be recovered once they have been incurred are called
b. Break -even analysis is a technique of studying relationship.
c. CIMA stands for the Institute of Cost and Management
d. Super Quick Ratio is Absolute Liquid Assets divided by Current
e. Leverage ratios indicate long-term position of an organisation.
f. ROI is Return on
g. Capital market is a place where people buy and sell financial instruments be it
equity or
h. ARR method ignores the concept of time value of
Q4. Expand the abbreviations-
a. MCV
b. CAPM
c. OTCEI
d. EPS
e. CRISIL
f. SHCIL
g.DCF
h WACC
PART B
Answer Any Three Questions each question carry 16 marks) 48 marks
Q5. Write short notes on( any four 16 marks
a Performance budget
b.Common size statement
c.Wealth maximization
d.Profitability index
e.Cost centre
f. Marginal cost of capital
Q6. 16 marks
a.Discuss the various elements of cost
b. What is break-even chart? List its advantages.
Q.7. 16Marks
a .List the main differences between budget and forecast
b. Define zero-base budgeting. What are its advantages?
Q.8 . 16 marks
a Discuss the importance and advantages of ratio analysis.
b Explain the factors contributing to the time value of money..
.
Q9. 16 marks
a. Discuss the reasons due to which capital budgetting decisions are significant.
b. ABC Co is considering a proposal for an investment of Rs. 60000 and the annual cash
inflows for 5 years is Rs. 18000, Rs. 20000, Rs. 15000, Rs. 6000 and Rs.12000. Calculate
the Payback priod and advise whether the proposal can be accepted if the standard
payback period is 4 years.
PART- C (Compulsory) 20 Marks
Q.10. Calculate the prime cost, factory cost ,cost of production ,cost of sales and Profit
from the following details:
ITEM Rs.
Direct materials 2,00,000
Direct wages 50.000
Direct expenses 10,000
Wages of foreman 5,000
Electric power 1,000
Lighting: Factory 3,000
Office 1,000
Storekeeper's wages 2.000
Oil and water 1,000
Rent: Factory 10,000
Office 5,000
Depreciation Plant 1,000
Office 2,500
Consumable store 5,000
Manger's salary 10.000
Director's fees 2,500
Office stationery 1,000
Telephone charges 250
Postage and telegrams 500
Salesmen's salaries 2,500
Travelling expenses 1,000
Repairs and renewal plant 7,000
Office premises 1,000
Carriage outward 750
Transfer to reserves 1,000
Discount on shares written off 1,000
Advertising 2,500
Warehouse charges 1,000
Sales 3,79,000
Income tax 20,000
Dividend 4,000