mcs 2010 questn paper

7/30/2019 Mcs 2010 Questn Paper

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Con. 2539-80-9616-10. 210. Vimal enterprises' sProf it and Loss A/c for the year 2009- 10 is given below

Company's Balance sheet is given below Rs in lacs

Calculate (a) Return on Equity and return on Capital EmployedV imal would l ike to expand i ts operation: I t would purchase F ixed Asset worth Rs 100 lacs andinvest in working capital of Rs ]00 lacs. F ixed Assets are financed by equity and working capital by15% Debt. The Sales wil l increase by 40%. Variable cost to sel ling price ratio wi ll reduce by 5%.Fixed cost other than depreciation wil l increase by 5%. Depreciation is on Straight l ine method.'Calculate(i) 'ROE and ROCE post expansion A lso calculate Total Asset turnover

11. Two Division A and B of Shubham Enterprsies operate as Profit Centers. Division A normallypurchases annually. I 0,000 nos. of required components from D ivision B ; which has recentlyinformed D ivision A that it will increase selling price per unit to Rs. I , 100. D ivision A decided topurchase the components f rom open market avai lable at Rs. 1000 per unit. Naturally, D ivision B isnot happy and justifies its decision to increase price due to inf lation and added that overal l companyprofitabi li ty wil l reduce and the decision wi ll lead to excess capacity in D ivi sion B , whose variableand fixed costs per U11itare respectively Rs 950 and Rs 1,100.

SalesVariable CostContributionFixed CostDeprecationPBITInterestPBTT@40%PA T

Equity15%Debt 300100400

Rs in Lacs500350150403080- - - - 1 2

652639

Fixed Asset 300Net Working Capital 100

400

a) Assuming that no alternate use exists for excess capaci ty in D ivi sion B , wi ll company aswhole benefit it D ivision A buys from the market..b) I f the market price reduces by Rs. 80 per unit. What would be the ef fect on the company(assuming Division B stil l has excess capacity) if A buys from the market.c) I f excess capaci ty. of Division B could be used for al ternative sales at yearly cost savingsof Rs 14.5 Lacs, should Division A purchase from outside?

Justify your answers with Figures.


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Con. 2539-80-9616-10. 3

[TURN OVER

12. A factory is currently working at 50% capacity and produces 10,000 units. A t 60% capacityutilization raw material cost increases by 2% and selling price falls by 2%. A t 80% capacityutilization, raw material costs increase by 5% and selling prices fall by 5%. A t 50% working theproduct cost Rs. 180 and is sold at R s. 200 per unit. The Unit C ost of Rs. 180 is made up as follows:M aterial - Rs. 100; Labour - Rs 30 ; Factory overhead .. Rs 30 (40% fixed); Administrativeoverhead- Rs 20 (50% fixed)a} Estimate profi ts at al l three levels of capacity utilization.

13. EitherA TV delearship, Veena Television (VT ) is organized into (our profi t centres- Colour TV sales(CTV); Black-and White (BW) TV Sales (BTV ). Spare Parts (SP); and Servicing (SG) - eachheaded by a manager. BTV , in addition to BW TV sales, also sells old TV s exchanged (underscheme) by customers while purchasing new CTVs. In one particular Instance, a new TV was soldfor R s 14 150 (financed by cash Rs. 2000, bank roan Rs 7350 and Rs 4800- exchange price for oldT V agreed by CTV Manager: Cost of new TV was Rs. 11420. Shivangi Manager.of B'I 'V examinedthe old TV (valued at Rs 3500 by TV Trade magazines) and felt that she could get Rs. 5000 for thatTV after repairing cabinet, resettl ing and servicing for which she would use services of (SP) and(SG). Prices chargeable toSTV by (SP) and (SG) are at market rates- Rs 235 for parts (by SP) andRs 470 for Services (by SG). Market prices are arrived at after marking up cost by 3-5 times (SG)and 1-4 times (SP) BTV pays a service commission of Rs 250 per TV sold. Overhead fixedallocations per sale are: CTV -- Rs 835; BTY - Rs 665; SP -- Rs. 32; SG .....RS. 1]4.a) T reating each as an independent Profi t Center, arrive at Sales Revenue, total cost and prof it of

each profit center.b) Can each of these prof it center survive i f they were independent business entities.c) A lso calculate Gross Profit and Net Profit of each.

OR, 13. For Effective strategy implementation, Soniya Ltd (SL) has been organized on product

decentralization basis and each division is headed by GM(General Manager). GM is responsible formanufacturing, purchasing f inance and Marketing activities for his divisional product group.Performance measurement is return o n Investment (ROI) of division. Annual budgets are split upinto four quarters and at the beginning of each quarter, performance of previous quarter is reviewedand budget for following quarter may be revised in consultation with GM . Data for div P is asunder. F igures in Rs. Crores


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Con. 253~B0-9616-1.0. 4

Budget ActualQuarter 1 Quarter 2 Quarter 1

Account receivable 8 7 . 5 8 . 5 0Cash 4 4 2 . 0Inventory 1 8 1 6 . 5 2 1 . 5 0Fixed assets 2 0 2 . 2 0Factory costs 2 1 1 9 1 7Marketing costs 7 6 3Freight 1 0 . 9 0 0 . 8 0Administrative expenses 3 2 . 6 3 . 2Sales : 4 0 3 6 3 4

(a) Review the first quarter performance on the basis of computation of various parameters(b) Would you suggest any revisions for the second quarter budget? Why / why not. Justify.

mcs 2010 questn paper

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