Strategic Cost Management

NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Cost Management

Internal Assignment Applicable for April 2023 Examination

Assignment Marks: 30

Instructions:

All Questions carry equal marks. All Questions are compulsory

All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far as possible.

All answers to be written individually. Discussion and group work is not advisable.

Students are free to refer to any books/reference material/website/internet for attempting their assignments, but are not allowed to copy the matter as it is from the source of reference.

Students should write the assignment in their own words. Copying of assignments from other students is not allowed.

Students should follow the following parameter for answering the assignment questions.

 

For Theoretical Answer

Assessment Parameter	Weightage
Introduction	20%
Concepts and Application related to the question	60%
Conclusion	20%

For Numerical Answer

Assessment Parameter	Weightage
Understanding and usage of the formula	20%
Procedure / Steps	60%
Correct Answer & Interpretation	20%

1. A Factory produces 3 types of moulds. While producing, for switching over from one mould to another, there is a shift-over process involved. Costs incurred are as follows: Shift-over costs Rs. 50,000 Factory Overheads Rs. 1,00,000/-Packing costs Rs. 20,000/-

Engineering Costs Rs. 30,000/-

Supervisor Costs Rs. 10,000/-

Quantity produced A- 1000, B – 2000, C- 4000

Allocate the costs to the 3 moulds (A,B and C) using Traditional Costing method and Activity Based Costing. Make assumptions as may be needed for cost drivers.

Compare the results and discuss. (10 Marks)

1. What is Life Cycle Costing? Explain in brief. What are its Stages? Briefly explain each stage. What are the 4 stages of a Product Life Cycle?

For each of the following, mention the nature of cost incurred (Low, Medium, High) over each phase.

Research and Development Sales Discounts

Maintenance and After Sales service Advertisements

(10 Marks)

1. a. Following are the Budgeted figures of PQR Ltd.

Particulars	UoM
Raw Material		50
Wages	Rs. Per Unit	10
Direct Expenses		20
Fixed Overheads	Rs.	100000
Variable Overheads	Rs. Per Unit	10
Selling & Distribution Expenses		3	20 % is Fixed
Administrative Expenses	Rs.	50000
Sales Price	Rs. Per unit	130

 

Capacity of the Factory is 10000 units. However due to Covid, the production capacity for the year was reduced to 80%.

Prepare a Budget for the factory in Normal and Covid situation.

(5 Marks)

1. b. With the following information, prepare the Budgeted Profit for the year for Company XYZ.

	UoM	A	B	C
No. of Units	Nos.	20	30	40
Sales Price	Rs./Unit	100	50	25
Variable Costs	Rs./Unit	40	20	5
Fixed Costs	Rs.	1,80,000

Assuming that the mentioned production numbers are at 100% capacity, under what situation would XYZ ltd. create a flexible budget (suggest any one). What benefit would it provide to the management of the company?

(5 Marks)

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