MS- 04

Management Programme

ASSIGNMENT
FIRST SEMESTER
(January to June)
2019

MS - 04: Accounting and Finance for Managers

School of Management Studies

INDIRA GANDHI NATIONAL OPEN UNIVERSITY
MAIDAN GARHI, NEW DELHI – 110 068
 ASSIGNMENT

Course Code : MS-04

Course Title : Accounting and Finance for Managers

Assignment No. : MS-04/TMA/SEM-I/2019

Coverage : All Blocks

Note : Attempt all questions and submit this assignment on or before 30th April, 2019 to the coordinator
of your study centre.

1. Why are Accounting Practices Standardised? What progress has been made regarding
Standardization of Accounting Practices in India?

2. What do you understand by the term Working Capital? Why is it required in a business and how
do you determine the requirement of Working Capital in a Business?

3. You are required to compute all Variances for ABC Ltd. The company is producing a single
product for which the standard cost data per unit of output is as given below:
Direct Material 20 Kg @ Rs 10 per kg
Direct Labour 12 hours at Rs 5.50 per hour
Variable Overheads 12 hours at Rs 10 per hour
Fixed Overheads Rs. 9,00,000 per month based on a normal volume of
60,000 direct labour hours
Selling Price Rs 600 per unit

The costs incurred and other relevant information for the month of November 2018 are as under.

Direct Material used 1,00,000 Kg at a cost of Rs. 10,50,000

Direct Wages Paid Rs 3,10,000 for 62,000 hours worked

Overheads Rs. 15,26,000 out of which a sum of Rs. 9,40,000 is fixed.

Actual Output Rs. 4,800 units sold for Rs. 28,32,000.

Assume no stocks of work-in-progress or finished goods at the beginning or at the end of the
month.
4. XYZ Ltd. is planning to invest 20,000 crore in a project which is expected to generate Cash
Flow, over the next ten years,as follows.

Project Cash Flow over the years of XYZ Ltd.

Year Cash Flow (in Year Cash Flow (in crores)

crores)
0 -20,000 6 4,000

1 1,000 7 5,000

2 1,700 8 5,500

3 2,000 9 5,500

4 2,500 10 5,500

5 3,000 - -

The WACC of the project is 10%. Compute the NPV and IRR of the Project. You are supposed
to advise XYZ Ltd on the basis of your findings whether it should accept or reject the project
under consideration.

5. Discuss the purpose of dividend policy. What are the different types of dividend policies?
Describe the factors that affect dividend decisions.