Strategic Cost Management

27 Jun

1. A closely held successful start-up venture has recently converted itself into a publicly listed company post a successful IPO and handed over the management in the hands of young professional managers. These teams of managers are a bit inexperienced in strategic business decisions. They have heard that Pears and Robinson have in their paper discussed the various dimensions of strategic issues. Discuss how these dimensions of strategic issues will be relevant in current scenario.

2. The Cost Accounting department and the Engineering department of a large EPC company have been at loggerheads off late. Their main contention has been the concept of Total Productive Maintenance (TPM) & Total Quality Management (TQM). The Engineering team feels that they are both the same with old wine in new bottle, whereas the Cost Accounting department opines otherwise. You are a newly appointed intern in the Cost Accounting department having freshly qualified as CMA. You are expected to resolve this conflict by providing your note discussing the similarities & differences between the two.

3. a) An input of 100 kgs. of materials yields to a standard output of 10,000 units. Standard price per kg of material is Rs.20. Actual quantity of material issued & used by production department is 10,000 kgs. Actual price per kg of material is Rs.21. Actual output 900,000 units. Compute Direct Material Cost variance, Material Price variance & Material Usage variance.

3. b) Number of employees is 200. Standard wage rate per employee is Rs.40 per day and standard daily output per employee is 100 units. Total number of days worked is 50 days (Idle time paid for and included above is half day for each employee). Actual wage rate per day is Rs.45. Compute Direct Labour Cost variance, Direct Labour Rate variance & Idle Time variance.

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