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Model Questions

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14 views4 pages

Model Questions

Model question

Uploaded by

lyrastarfallauthor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MODEL QUESTIONS

Strategic Management Accounting

Question No 01

i. Discuss briefly the significant events associated with the evolution of management
accounting since 1950s.
(09 Marks)
ii. Explain how Strategic Management Accounting is different compared to
Conventional Management Accounting.
(08 Marks)
iii. Distinguish Activity Based Costing method (ABC) from Traditional Costing System.
(08 Marks)
(Total 25 Marks)

Question No 02

i. “Balanced Scorecard (BSC) reduces manager’s emphasis on short run financial


performance.” State whether this statement is true or false and provide the
justification.
(10 Marks)
ii. Alpha Hospitals PLC is an underperforming hospital in the country. Hospital is
operating in a very competitive market and they are struggling to maintain it’s current
market share. Management of Alpha Hospitals wants to implement a new method for
their operations focusing on both financial and non-financial factors. Alpha Hospitals
outsourced this task to ‘SS Consultants’. Assume you are the responsible person to
lead the consultants and you are planning to develop Strategy map for Alpha
Hospitals PLC.

Develop a Strategy map for Alpha Hospitals PLC.


(15 Marks)
(Total 25 Marks)
Question No 03

i. Infotech Ltd makes and sells two types of products. Product A and Product B. The
management accountant is considering increasing the price for the Product B and has
produced the following information.
 At the current selling price of LKR 55 per product, weekly sales of the
Product B are 900 units.
 If the price is increased to LKR 70 per product, weekly demand for the
Product B will fall to 750 units.
Find the linear relationship between price and quantity demanded for the Product B.
(10 Marks)
ii. “Three purposes of budgeting are: forecasting and resource allocation, measurement
and control, and cost management.” Explain how the above purposes are achieved
more effectively through ‘Network N-form model’ over the ‘Multi-divisional M-form
model’.
(15 Marks)
(Total 25 Marks)

Question No 04

i. State five assumptions of Break-Even Analysis.


(05 Marks)
ii. Analyse any four (04) of following Cost Management Techniques that how
Manufacturing Organization can adopt those into their practices to gain the
competitive advantage.
a. Kaizen Costing
b. Business Process Re-engineering
c. Life Cycle Costing
d. Tear Down Analysis
e. Target Costing
f. Just in Time Approach
(20 Marks)
(Total 25 Marks)
Question No 05

The owner of a tourist hotel is facing a difficult decision. It is low season and because the
weather is unpredictable at this time of the year it is difficult to predict the demand for the
hotel’s facilities. If the weather is poor then there will be 200 room nights demanded for the
hotel’s facilities. There is a 70% likelihood of the weather being poor. If the weather is good
then there will be 600 room nights demanded for the hotel’s facilities, but there is only a 30%
chance that the weather will be good.

The owner of the hotel is considering advertising some reduced prices locally or nationally in
order to improve the demand during this period.

If the reduced prices are advertised locally and if the weather is poor, then there is a 60%
chance that the lower prices would affect demand and would cause there to be 300 room
nights demanded, but if the weather is good, then there is a 40% chance that the lower prices
would affect demand and would cause there to be 800 room nights demanded.

If these lower prices were advertised nationally there is a 50% chance that these demand
levels would increase to 400 room nights and 900 room nights respectively.

The earnings expected, (before deducting the costs of any local or national advertising), at
different levels of demand are as follows:

Room nights Earnings (£)


demanded
200 (35,000)
300 (15,000)
400 (5,000)
500 20,000
600 30,000
700 45,000
800 65,000
900 90,000

The costs of advertising locally and nationally are £10,000 and £25,000 respectively

Required:

i. Prepare a decision tree to illustrate the above problem and use this to recommend,
with reasons, the best course of action for the owner of the hotel.

ii. Briefly Explain following terms


a. Risk Averse decision maker
b. Risk Seeker
(25 Marks)

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