MBC-104 2019-20

demand and student numbers will increase to 50.
If economic
conditions are good there is a 25% chance the advertising will
stimulate further demand and numbers will increase to 25 students.
The profit expected, before deducting the cost of advertising of
$15,000, at different levels of student numbers are as follows:
Number of students Profit in $
15 (10,000)
20 15,000
25 40,000
30 65,000
35 90,000
40 115,000
45 140,000
50 165,000
Demonstrate, using a decision tree, whether the programme should
be advertised.
UNIT-V
10. W Ltd has budgeted sales of 6,500 units but actually sold only 6,000
units. Its standard cost card is as follows:
Direct material 25
Direct wages 8
Variable overhead 4
Fixed overhead 18
–––
Total standard cost 55
Standard gross profit 5
–––
Standard selling price 60
The actual selling price for the period was $61.
Required:
Calculate the sales price and sales volume variance for the period:
Using absorption costing
Using marginal costing
OR
11. What is performance analysis? Explain performance analysis in
public sector organization.
[43/II S/123]
[April-23]
GITAM (Deemed to be University)
[MBC-104]
B.Com. (Hons.) Degree Examination
II Semester
PERFORMANCE MANAGEMENT
(For the admitted batches 2019–20 & 2020-21)
Time: 3 Hours Max. Marks: 60
---------------------------------------------------------------------------------------------------
Instruction: All parts of the unit must be answered in one place only.
---------------------------------------------------------------------------------------------------
SECTION-A
1. Answer All the following:
Each answer should not exceed one page. (10x2=20M)
a) Explain the difference between Risk and Uncertainty.
b) What is Material yield variance?
c) What is Incremental budget?
d) What is Target Costing?
e) Define Penetration pricing strategy
f) What is the formula of Throughput accounting ratio?
g) Explain about Planning variance
h) What is Balanced score card?
i) What are the different stages of Life-Cycle Costing?
j) Explain the characteristics of public sector Organization
SECTION-B
Answer the following: (5x8=40M)
UNIT-I
2. Demand for a product made by P Ltd is 500 units per week. The
product is made in three consecutive processes – A, B, and C.
Process capacities are:
Process A B C
Capacity per week 400 300 250
The long run benefit to P Ltd of increasing sales of its product is a
present value of $25,000 per additional unit sold per week.
Investigations have revealed the following possibilities:
(a) Invest in a new machine for process A, which will increase its
capacity to 550 units per week. This will cost $1m.
(b) Replace the machine in process B with an upgraded machine,
costing $1.5m. This will double the capacity of process B.
(c) Buy an additional machine for process C, costing $2m. This will
increase capacity in C by 300 units per week.
Required:
What is P Ltd.’s best course of action?
OR
3. What factors influences the price of a product or a service?
UNIT-II
4. BJS Ltd produces and sells the following three products:
Product X Y Z
Selling price per unit $16 $20 $10
Variable cost per unit $5 $15 $7
Contribution per unit $11 $5 $3
Budgeted sales volume 50,000 units 10,000 units 100,000 units
The company expects the fixed costs to be $450,000 for the coming
year. Assume that sales arise throughout the year in a constant mix.
Required :
a) Calculate the weighted average C/S ratio for the products.
b) Calculate the breakeven sales revenue required.
c ) Calculate margin of safety
d) Calculate the revenue required to achieve a target profit of
$9,00,000
OR
5. The 'Duke of York' is an independent cinema in Brightville. It is

considering whether or not to hire a movie to show in its cinema for
one week. If the management decides to hire the movie, it will be
screened 20 times during the week. The cost of hiring the movie for
the week is $70,000. You work as the cinema's accountant, and you
have been asked to evaluate the financial effects of the decision to
hire the movie. You have made the following estimates:.
a) Customers
The entrance fee for every customer is $10. The number of
customers watching the movie at each screening is uncertain, but has
been estimated as follows: there is a 50% probability 200
customers will attend the screening; 30% probability 250 customers
will attend, and 20% probability 150 customers will
b) Customer contribution for each sale of refreshments
The average contribution per customer earned from the sale of
refreshments is also uncertain but has been estimated as follows:
Probability $ average contribution per customer
40% probability $10 per customer
UNIT-III
6. Explain the differences between Top-down & Bottom-up budget.
OR
7. The direct labour efficiency variance in respect of a new product has
been calculated as $14,700 Favourable. The variance was calculated
using standard cost data which showed that each unit of the product
was expected to take 8 hours to produce, at a cost of $15 per hour.
The actual output was 560 units, and the actual time worked in the
manufacture of the product totalled 3,500 hours, at a cost of
$57,750. However, the production manager now realises that the
standard time of 8 hours per unit was the time taken to produce the
first unit and that a learning curve rate of 90% should have been
anticipated for the first 600 units.
Required:
Calculate the planning and operational efficiency variances for
labour efficiency, following the recognition of the learning curve
effect (b = – 0.1520 for a 90% learning curve).
UNIT-IV
8. How performance management system is useful for management
for decision making?
OR
9. A university is trying to decide whether or not to advertise a new
postgraduate degree programme. The number of students starting the
programme is dependent on economic conditions:
• If conditions are poor it is expected that the programme will attract
40 students without advertising. There is a 60% chance that
economic conditions will be poor.
• If economic conditions are good it is expected that the programme
will attract only 20 students without advertising. There is a 40%
chance that economic conditions will be good.
If the programme is advertised and economic conditions are poor,
there is a 65% chance that the advertising will stimulate further

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demand and student numbers will increase to 50.

5. The 'Duke of York' is an independent cinema in Brightville. It is

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