INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
PAPER No. 15
COST AND FINANCIAL MANAGEMENT
Date :15.06.2016 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)
Q.1. Select the most appropriate answer from the options given below: 8 marks
1. Profit maximization objective ignoresa.
Time factor
b. Effective allocation of resources
c.optiimum utilizationof resources
d.. maximum social welfare
2 Which one of the following is not a ratio in measuring short-term solvency position of an
organisation
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
June 2016
5. One of the following is not a source of long term fundsa.
Working Capital
b. Warrants
c. Equity shares
d. Debentures
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 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 8 Marks
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.
Q.3. Fill in the blanks with appropriate words: 8 marks
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- 8 marks
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 4 x4 16 marks)
a Performance budget
b.Common size statement
c.Wealth maximization
d.Profitability index
e.Cost centre
f. Marginal cost of capital
Q6. a.Discuss the various elements of cost
b. What is break-even chart?List its advantages.
Q.7 a. List the main differences between budget and forecast
b Define zero-base budgeting.What are its advantages?
Q.8 a.Discuss the importance and advantages of ratio analysis.
b. Explain the factors contributing to the time value of money.
Q9. a.Discuss the reasons due to which capital budgeting decisons are significant.
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. 16000, Rs. 10000, Rs. 4000 and Rs.8000.
Calculate the Payback priod and advise whether the proposal can be accepted if the
standard payback prriod is 4 years.
PART- C (Compulsory) 20 Marks
Q.10. Prepare a Cost Sheet based on the followinf details extracted from the books of a
manufacturer:-
Particulars Rs.
Materials Purchased and Consumed 12000
Direct Labour Expenses 22000
Direct Expenses 6300
Factory depreciation 110
Repairs and Renewals 220
Insurance 520
Rent, Rates and Taxes 630
Electric Consumption 150
Power 110
Fuel 60
Water 50
Watchman's Wages 110
Factory Manager's 'Salary 550
Foreman's Salary 110
Office Stationary 50
General Charges 120
Bank Charges 160
Office Rent 100
Postage Stamps 40
Telephones 10
Manager' Salary 520
Office Clerk's Salary 220
Advertising 110
Commission to Salesmen 220
Discounts 110