[ December ¯ 2011 ]
(REVISED SYLLABUS - 2008)
GROUP - III
Paper-13 : MANAGEMENT ACCOUNTING- STRATEGIC
Section I : Strategic Management
Q. 1. Differentiate between :
(a) Plan and policy
(b) Programmed and contingency strategy
(c) Effects of learning and experience curve
(d) Market and marketing research
Answer 1. (a)
A plan is directed towards achievement of specific
objectives over a specified period of times.
A policy is a guide which delimits action but does
not specify time. It is open ended, rather timeless.
Thus, “a policy is not a plan, but guiding cannon
of interest”. Policies are planned expressions or
understandings towards the range of behaviour,
which guide or channel thinking and action in
decision making and limit for discretionary action
by individuals responsible for implementing
Answer 1. (b)
(i) A programmed strategy is a strategy which is
planned in such a detailed and integrated way
that it is difficult to change it, once it has begun
to be implemented.
A contingency strategy requires the planner to
choose the preferred strategy, given the best
estimates of conditions and other strategic
choices. But it is flexible enough to allow for shifts
in the thrust of the plan, when conditions warrant
(ii) In effect, programmed strategies emanate from
Second generation planning leads to contingency
(iii) Programmed planning is suitable for stable
environment with people who prefer welldefined roles.
The contingency strategy is suitable for unstable
environment with people who prefer variety and
[ December ¯ 2011 ]
Revisionary Test Paper (Revised Syllabus-2008)
Answer 1. (c)
Effects of Learning Curve
(i) Learning effects typically refer in a narrow way
to labour costs alone, as they reflect short term
cost reductions achieved through learning by
Effects of experience curve
On the other hand, experience effects refer to the
reduction in total costs achieved over the total
life of a product. Both are measured by total
accumulated output to date. But, learning and
experience curves differ with respect to the range
of costs covered, the range of output during which
the reduction in costs supposedly takes place; and
the causes of cost reduction.
(ii) Learning by doing is then seen to be something
that only affects assembly operators.
Everyone involved in an organisation, from the
chairperson to the apprentice - all of whom
should improve the performance of their role
Answer 1. (d)
Information is essential if management is to set
realistic objectives and strategies, and make
effective decisions. Within the modern business,
data from many sources is processed into
information systems. Some of the necessary data
can only be provided by specific research marketing research, defined as “the systematic gathering, recording and analysing of data about
problems relating to the marketing of goods and
Market research properly, is only one part of
marketing research. Market research, is concerned
with information about specific markets, their
makeup, their behaviour and the change in them.
Market research tends to be quantitative and much
of it is concerned with measurement of parameters
which may have been shown to be important by
Q. 2. (a) ‘The intensity of competition depends on several factors.’ Identify these factors and discuss briefly on them.
(b) Can cost leadership strategy allow a firm to earn above-average returns despite strong competitive forces? Discuss .
(c) Explain : Cost leadership vs. cost reduction.
Answer 2. (a)
The intensity of competition depends on several factors. The possible factors are as follows : (i) Large number of...
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