INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
PAPER No. 15
COST AND FINANCIAL MANAGEMENT
Date :19.12.2016 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: 8 marks
1. Which one of the following is not a ratio in measuring long term solvency position of an organisation
a. Defensive interest ratio
b. Debt equity ratio
c. Capital gearing ratio
d Proprietary ratio
2 Debtors turnover ratio is credit sales divided by
a. Sales
b Average debtors.
c. Average stock
d. Average creditors
3. One of the following is an Investment company
a. CARE
b. ICRA
c. UTI
d CRISIL
4. On the basis of time ,budget can be divided into which of the following categories
a. Short term
b Current
c Long term
d. All the three above
Dec 2016
5. The maturity period of Commercial Papers varies between 90 days to
a. 180 days
b 270 days
c. 360 days
d 400 days
6. Profit maximization objective ignores
a. Effective allocation of resources
b. Time factor
c. Maximum social welfare
d. Optimum utilization of resources
7. The no. of steps involved in computation of Cost of capital is
a. Three
b. Four
c. Five
d. Six
8. Mutual Funds are subject to monitoring and inspection by
a. DEA
b. RBI
c. DCA
d. SEBI
Q.2. State whether the following statements are true or false: 8 marks
a. Commercial Paper is a short-term source of finance.
b. Cost Centre is also known as Responsibility Centre.
c LIC is an Investment Company.
d. CRISIL is not an Investment Company.
e Capital market is regulated by RBI.
F Budget and Forecast are the same.
g. Current ratio is not an important ratio in measuring short-term solvency.
h. Working Capital refers to long-term funds to meet operating expenses.
Q.3. Fill in the blanks with appropriate words: 8 marks
a. Spending on advertising or researching a product idea are examples of costs.
b. There are two kinds of variances viz.,cost variance and variance
c ROCE is Return on Capital
d ARR Method ignores the concept of time value
e. CAPM Stands for Capital Asset Pricing
f Gross Working Capital refers to the total
g Super Quick Ratio is Absolute Liquid assets divided by current
h. Debentures is a long term source of
Q4. Expand the abbreviations- 8 marks
a . OTCEI
b. CRISIL
c. CARE
d. AMC
e. ZBB
f. LRV
g. DFHI
h DCF
PART B
Answer Any Three Questions each question carry 16 marks) 48 marks
Q5. Write short notes on( any four 4 x4 16 marks) 16 marks
a Flexible budget
b Common-size statement
c. Trend ratios
d. Cost centre
e. Objectives of a budget
f. Money market
Q6. a. Discuss the various elements of cost. 8 marks
b. What is break-even chart? List its advantages 8 marks
Q.7.a..Explain the factors contributing to the time value of money. 8 marks
b. Discuss the importance and advantages of ratio analysis. 8 marks
Q.8 .a Explain cost of capital. What is its importance? 8 marks
b. ABC Co is considering a proposal for an investment of Rs. 40000
and the annual cash inflows for 5 years is Rs. 12000, Rs. 12000,
Rs. 10000, Rs. 4000 and Rs.8000. Calculate the Payback priod and
advise whether the proposal can be accepted if the standard payback
period is 4 years. 8 marks
.
Q.9. a. Explain at least six sources of working capital. 8 Marks
b Explain the steps involved in computation of Weighted Average Cost of Capital
8 marks
PART- C (Compulsory) 20 Marks
Q.10. Prepare a Cost Sheet based on the followinf details extracted from the accountings
books of a manufacturer:-
Particulars Rs.
Materials Purchased and Consumed 14000
Direct Labour Expenses 22000
Direct Expenses 7300
Factory depreciation 110
Repairs and Renewals 220
Insurance 620
Rent, Rates and Taxes 730
Electric Consumption 200
Power 110
Fuel 60
Water 50
Watchman's Wages 160
Factory Manager's 'Salary 650
Foreman's Salary 110
Office Stationary 50
General Charges 170
Bank Charges 160
Office Rent 130
Postage Stamps 40
Telephones 10
Manager' Sal 550
Office Clerk's Salary 240
Advertising 130
Commission to Salesmen 230
Discounts 140