ARAVIND 09901366442 – 09902787224

interpretation of the residuals in the regression?
3. Use the market model to estimate the beta for American Standard using the last 36 months of
returns (the regression procedure in Excel is one easy way to do this). Plot the monthly returns
on American Standard against the index and also show the fitted line.
4. When the beta of a stock is calculated using monthly returns, there is a debate over the number
of months that should be used in the calculation. Rework the previous questions using the last
60 months of returns. How does this answer compare to what you calculated previously? What
are some arguments for and against using shorter versus longer periods? Also, you’ve used
monthly data, which are common choice. You could have used daily, weekly, quarter, or even
annual data. What do you think are the issues here?
5. Compare your beta for American Standard to the beta you find on finance.yahoo.com. How
similar are they? Why might they be different?
Cost And Management Accounting
1. “Management accounting is a mid-way between financial and cost accounting.” Elucidate.
2. What is the major revenue recognition criterion?
3. What is a trading account? What are its major constituents? What is its major outcome?
4. The cash flow statement is as useful to shareholders and lenders as to management. Explain.
5. (a) “All future costs are relevant.” Do you agree? Why?
(b) “Fixed costs are really variable. The more you produce the less they become.”
Do you agree? Explain.
6. In connection with inventory ordering and control, certain terms are basic. Explain the
meaning of each of the following:
1. Economic order quantity
2. Re-order point
3. Lead time
4. Safety stock
7. What is meant by under/over-absorption of factory overheads? How will you account for them
in cost accounts? Does it bear any impact while submitting quotations?
8. A manufacturing company operating a system of budgetary control finds that their production
capacity during the year varies between 75 per cent and 90 per cent as against the budgeted
capacity of 80 per cent for the year. It has been suggested that a system budgets should be
introduced to effectively control costs. Outline the steps you would take to implement this