Q6
(a) A proforma cost sheet of a company provides the following data : | Cost per unit | ₹ | |-------------|---| | Raw material | 52.00 | | Direct Labour | 19.50 | | Overheads | 39.00 | | Total Cost | 110.50 | | Profit | 19.50 | | Selling Price | 130.00 | The following is the additional information available : Average raw material in stock : one month Credit allowed to debtors : two months Time lag in payment of wages : one and a half weeks Overheads : one month One fourth of the sales are on cash basis. Cash Balance is expected to be ₹1,20,000. You are required to prepare a statement showing the working capital needed to finance a level of activity of 70,000 units of output. You may assume that production is carried on evenly, throughout the year and wages and overheads accrue similarly. 20 marks (b) What is standard costing ? How is it used in management accounting ? How can a company differentiate between controllable and uncontrollable variances and what strategic actions can be taken based on this distinction ? 15 marks (c) "Well differentiated products create a significant competitive advantage and a distinctive aura for themselves." Analyse the statement and discuss the various attributes on the basis of which products can be successfully differentiated. 15 marks
हिंदी में प्रश्न पढ़ें
(a) एक कंपनी का कच्चा लागतपत्र निम्नलिखित आँकड़े दे रहा है : लागत प्रति इकाई | ₹ कच्चा माल | 52.00 प्रत्यक्ष श्रम | 19.50 उपरिव्यय | 39.00 कुल लागत | 110.50 लाभ | 19.50 विक्रय मूल्य | 130.00 निम्नलिखित अतिरिक्त जानकारी भी उपलब्ध है : स्टॉक में औसत कच्चा माल : 1 माह denदारों को अनुमत क्रेडिट : 2 माह मजदूरी भुगतान में समय अंतराल : डेढ़ सप्ताह उपरिव्यय : एक माह एक चौथाई विक्रय नकद आधार पर है और अपेक्षित नकदी संतुलन ₹1,20,000 है। 70,000 इकाइयों के उत्पादन को वित्त देने के लिये, आवश्यक कार्यशील पूंजी को दिखाने वाला आपको एक विवरण बनाना है। आप यह मान सकते हैं कि उत्पादन सम रूप से साल भर हो रहा है और मजदूरी एवं उपरिव्यय भी समान रूप से प्राप्त हो रहे हैं। 20 (b) मानक लागत निर्धारण क्या है ? प्रबंध लेखांकन में इसका प्रयोग किस प्रकार होता है ? एक कंपनी किस प्रकार नियंत्रणीय और अनियंत्रणीय विचरणों में अंतर कर सकती है और इस अंतर के आधार पर कौन सी रणनीतिक कार्यवाहियाँ की जा सकती हैं। 15 (c) "भली प्रकार विभेदित उत्पाद, एक महत्वपूर्ण प्रतिस्पर्धात्मक लाभ की सृष्टि कर सकते हैं, और अपने लिये एक विशिष्ट आभा की भी।" इस कथन का विश्लेषण कीजिये और उन विभिन्न गुणों की विवेचना कीजिये जिन के आधार पर उत्पादों को सफलतापूर्वक विभेदित किया जा सकता है । 15
Directive word: Calculate
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How this answer will be evaluated
Approach
Begin with precise working capital calculation for part (a) using operating cycle method, showing step-by-step computation of current assets and liabilities. Allocate approximately 40% time to part (a) given its 20 marks weightage, 30% each to parts (b) and (c). For part (b), define standard costing, explain its managerial applications, then distinguish controllable vs uncontrollable variances with strategic responses. For part (c), analyse the quoted statement using Porter's differentiation framework and enumerate product differentiation attributes with Indian corporate examples. Conclude with integrated insights on how financial control (part a) and strategic differentiation (part c) complement management accounting systems (part b).
Key points expected
- Part (a): Correct computation of annual cost of production (₹77,35,000), monthly costs, debtors calculation for 75% credit sales, and final working capital requirement including ₹1,20,000 cash balance
- Part (b): Clear definition of standard costing as predetermined cost measurement system; explanation of planning, control, and decision-making functions in management accounting
- Part (b): Distinction between controllable variances (managerial action possible: material price, labour efficiency) vs uncontrollable variances (external factors: market price fluctuations, regulatory changes) with appropriate strategic responses
- Part (c): Critical analysis of the statement linking product differentiation to sustainable competitive advantage and brand equity creation
- Part (c): Comprehensive coverage of differentiation attributes: product features, quality, durability, design, service, personnel, channel, image; with Indian examples like Titan watches, Amul, or Tata Motors
- Integration across parts: Demonstration of how working capital efficiency supports differentiation strategy through operational flexibility
Evaluation rubric
| Dimension | Weight | Max marks | Excellent | Average | Poor |
|---|---|---|---|---|---|
| Concept correctness | 25% | 12.5 | Part (a) shows flawless calculation: correct annual production cost (₹77,35,000), accurate monthly breakdowns, proper debtors for 75% credit sales (₹15,16,667), wages payable for 1.5 weeks (₹50,531), overheads payable (₹2,27,500), and final working capital figure; parts (b) and (c) demonstrate precise understanding of standard costing mechanics and differentiation economics | Part (a) has minor calculation errors or incorrect time period conversions; parts (b) and (c) show basic conceptual grasp but with some definitional imprecision or missing variance categories | Part (a) contains fundamental errors in operating cycle computation, omits cash balance, or miscalculates credit sales proportion; parts (b) and (c) confuse standard costing with budgetary control or misidentify differentiation as mere advertising |
| Framework citation | 20% | 10 | Explicitly cites working capital estimation frameworks (Wilson Sutherland or operating cycle approach), standard costing pioneers (Taylor, Gantt, or CIMA definitions), and Porter's generic strategies for differentiation; references Indian accounting standards or SEBI working capital disclosure requirements where relevant | Mentions standard costing and differentiation frameworks implicitly without proper attribution; shows awareness of management accounting evolution without specific theorist names | No framework attribution; presents calculations and concepts as isolated technical procedures without theoretical grounding |
| Case / Indian example | 15% | 7.5 | Part (a) contextualises with Indian manufacturing sector working capital norms; part (b) cites Indian companies using standard costing (TISCO, BHEL, or Maruti); part (c) analyses successful Indian differentiation cases—Titan's design differentiation, Amul's quality and distribution, or Crompton's service differentiation | Uses generic international examples (Toyota, Apple) or mentions Indian companies without specific strategic analysis of their differentiation or costing systems | No examples or irrelevant foreign examples without Indian context; fails to connect theoretical concepts to business practice |
| Multi-perspective analysis | 25% | 12.5 | Part (b) presents multiple perspectives on variance control: operational (production manager), financial (treasury), and strategic (board level); part (c) evaluates differentiation from consumer psychology, competitive dynamics, and resource-based view angles; demonstrates tension between cost leadership and differentiation | Addresses controllable/uncontrollable distinction superficially; lists differentiation attributes without analytical depth or interconnection between financial and strategic dimensions | Single perspective treatment; describes standard costing only from accounting viewpoint or presents differentiation as unqualified benefit without cost-benefit trade-offs |
| Conclusion & recommendation | 15% | 7.5 | Synthesises all three parts: recommends how optimal working capital structure (part a) enables investment in differentiation capabilities (part c) monitored through strategic standard costing systems (part b); proposes specific actionable improvements for Indian manufacturing context | Summarises each part separately without integration; offers generic conclusions on importance of working capital management and product differentiation | No conclusion or abrupt ending; fails to address all three sub-parts in closing remarks |
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