IGNOU MCO-05 QUESTION PAPER WITH SOLUTION FOR EXAM PREPARATION

1. “Fixed costs are really variable the more you produced the less they become”. Comment on the statement. (10, 10)

2. How does cash flow analysis help the Management undecision making? Explain.

3. Standard cost of product is : (20)

Time : 6 hours per unit

Rate : Rs 4 per hour

Actual cost :

 Production 1,500 units

 Hours taken 7,600 units

 Idle time (in hours) 400

Total hours : 8,000

Total labour cost announced to Rs. 40,000. Calculate Labour Variance.

4. “A Budget is a means and budgetary control is the end result”. Explain.

5. What do you mean by the term ‘Budgetary Control’? What are its advantages? Also explain the statement that, “A budget is a means and Budgetary control is the end result”. (20)

6. “Funds Flow statement also suffers from window dressing of accounts and hence fails to give true view of funds movement”. Do you agree with this statement? Give your views.

7.  The following data are available from the records of a company: (20)

Sales Rs. 60,000

Variable Cost Rs. 30,000

Fixed Cost Rs. 15,000

 You are required to :

(a) Calculate the P/V Ratio, Break – Even Point and Margin of Safety at this level.

(b) Calculate the effect of 10% increase in the sale price.

(c) Calculate the effect of 10% decrease in the sale price.

8. “Performance budgeting requires preparation of periodic performance reports”. Explain.
(10, 10)

9. Describe different methods of costing and state the particular industries to which the can be applied .

10. What is Cash flow statement? Explain the various techniques of preparing cash flow statement. How does it help the management in decision making? (20)

11. What do you understand by ‘Zero Based Budgeting’? State the benefits that accrue from it and also its disadvantages. (20)

12. What do you mean by Marginal Costing? Explain the Managerial uses of Marginal costing with suitable examples.