CA FINAL

SPOM SET-B (SCPM)

IMPORTANT TOPICS &
ACTUAL QUESTIONS OF EXAM
(Sureshot Way to Score 50+ Marks)

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SPOM SET B (SCPM) – IMPORTANT TOPICS

{By Dhruvika kothari, CA Finalist (Group II cleared)}
YouTube: Dhruvika kothari, WhatsApp: Study with DK , Telegram: Study with DK

Sr. No. Topics Pg. No.

(ICAI SM)
CHAPTER 1: INTRODUCTION TO STRATEGIC COST MANAGEMENT
IMPORTANT TOPICS
1. Porter 5 Forces 1.43
2. Value Chain Analysis 1.9
3. STEPPLE Full Form (Social, Technological, Economical, Environmental, 1.33
Political, Legal & Ethical)
4. SBU (Strategic business unit) 1.8
5. Cost Leadership & Product Differentiation 1.20
QUESTIONS ASKED IN THE EXAM
Case Study related to Mining & Production of coal company in relating to
Porter's Five Forces
Q.1 Identify the level of threat of new entrants. (Answer: Low)
Q.2 Relating to the above C.S.: what if allocation of new coal blocks to steel,
thermal & other industries?
Q.3 Match the following on Porter's five forces

Q.4 Identify the level of threat each force poses in the case like High, low, medium
and none (Bargaining power of supplier, buyer and threat of new entrants
and threat of substitutes)
Q.5 Identify the level of Bargaining price of the buyer & Supplier
Q.6 A Co. had 4 products (S,P,A,N) with different tag lines.
S - why pay more when you can pay less
P - slogan related to sustainability & environment
A - Safety first! N - you get what you pay for.
Q1. Which product relates to cost leadership? (S)
Q2. which product relates to differentiation? (N)

CHAPTER 2: MODERN BUSINESS ENVIRONMENT

IMPORTANT TOPICS
1. Total Cost of Quality (Components: Prevention, Appraisal etc.) 2.4
2. Gain Sharing Arrangement (Case Scenario- Cost saving) 2.33
3. Service Level Agreement (Must do Q. of Atul sir Misc Chapter) -
4. Downsizing 2.34
5. Offshoring 2.34
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6. Outsourcing 2.34
7. Supply Chain Management (SCM) 2.16

QUESTIONS ASKED IN THE EXAM

Q.1 Rework cost can classified as (Answer: Internal failure cost)

Case Study related to the case scenario in pg 2.33 with additional data of how
much cost savings were generated in each of the first 4 years.
Q.2 How much cost savings is attributable to Company 1?
Q.3 How much cost savings is attributable to Co. 2?
CHAPTER 3: LEAN SYSTEM & INNOVATION
IMPORTANT TOPICS
1. JIT (Just in Time) (Must Do TYK Q. 2) 3.14
2. Kaizen costing 3.16
3. 5S 3.21
4. Six Sigma 3.37
5. OEE (TPM Topic) (Must Do TYK Q.5) 3.52

QUESTIONS ASKED IN THE EXAM

Case Study: Reverse Calculation of OEE % & Availability %, data related to
working normal working time, break time, good units, total units etc were
given.
Q.1 Calculate Performance %
Q.2 Calculate Quality %
Q.3 Calculate the ideal cycle time

Q.4 Which of the following does the Kaizen improvement process not focus on?
(Answer: Improvement by innovation)
Q.5 Aim of JIT. (Answer: reduce inventory holding costs and increase inventory
turnover

CHAPTER 4: SPECIALIST COST MANAGEMENT TECHNIQUES

IMPORTANT TOPIC
1. Throughput Accounting / Theory of Constraints (TYK Q. 5) 4.61
2. Target Costing (Read Notes) -
3. Product Life Cycle / Life Cycle Costing (TYK Q. 3) 4.59
4. Environmental Mgt. Accounting (EMA) (TYK Q. 8) 4.63

QUESTIONS ASKED IN THE EXAM

A caselaw similar to TYK 8 (Pg 4.63)
Q.1 Calculate product wise profitability based on the original cost
allocation.
Q.2 Calculate the product wise profitability based on EMA.
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CHAPTER 5: MGT. OF COST STRATG. FOR EMERGING BUSINESS MODEL

IMPORTANT TOPIC
1. Digital Technologies (Must read Definitions) 5.3
2. Freemium Model & Others 5.30
3. Hidden Model, Open-Source Model, 5.30
4. Impact of Automatic & Digitalization on the Economy -
5. Meaning & Effect of Disruptive Innovation (Direct Theory Ques.) 5.13
6. Disruptive Method 5.13
7. Hyper Disruptive Business Model 5.29
8. Types of E-Commerce Model (Digital Platform Model) 5.30
9. Robotics 5.5
10. Blockchain (Direct Theory Ques.) 5.9
11. Incubators (Direct Theory Ques.) 5.25
12. Meaning of Incumbents (Direct Theory Ques.) 5.21

QUESTIONS ASKED IN THE EXAM

Q.1 Find out a correct sentence about freemium –
a) basic version is free & upgraded version is at a premium, b) freemiums are
free forever for basic versions & customers can’t get the full product c) offers
a free version for a limited time. (Answer: A)
Q.2 Business model in which the company applies a lock system limiting
customer's options. (Answer: service ecosystem model)
Q.3 Identifying On-Demand Model. (Answer: Swiggy & Zomato)
Q.4 Identification of Company Model: The company will charge them a fee to
upgrade to a more comprehensive offer. To gain access to additional features
or an upgraded version, users must pay a set fee to the company.
(Answer: Freemium)
Q.5 A company sold Printers cheaply to build demand for high-margin printer
cartridges. Which model is followed by co?
(Razorblade business model - Note that it is an alt name for cross-
subsidization. "Cross subsidization" term is not given in the option.)
Q.6 A question on the business model in which the company applies a lock system
limiting customers options - service ecosystem model
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CHAPTER 6: STRATEGIC REVENUE MANAGEMENT

IMPORTANT TOPIC
1. Pricing Strategy (Skimming, Penetration etc.)
2. Kano Model
3. Outsourcing (Advantages & Disadvantages) 6.65
4. Price in Profit Maximization Model
5. Learning Curve 6.37
6. Cost Plus Pricing (TYK Q. 11) 6.85

QUESTIONS ASKED IN THE EXAM

Q.1 Which of the following is not a reason to use the concept of a Learning
Curve? (Answer: Introducing new technology)
Q.2 Which Price Strategy involves setting a low initial price to quickly gain a large
market share (Answer: Penetration pricing)
Q.3 Premium Price Strategy is when a) Prices are high & demand is elastic
b) prices are high & demand inelastic c) prices are low & demand elastic
Q.4 Pricing strategy of combining package with manufacturing coupon or rebate?

Case Study related to Optimum price level (SM page. 6.37) Demand for
Different price levels given. Direct material, Direct labour, Variable cost, and
Fixed Cost data are also provided.
Q.5 Calculate the Price at which profit is maximum
Q.6 If a company sells at the lowest possible price, DL cost will come down by
10% because of the learning curve effect. Calculate revised profit.

Q.7 A company reduces the price of its product to throw away the competitor
from the market. This pricing strategy is called? - (Answer: Predatory Pricing)
Q.8 Pricing below cost- large stock & market fallen (Answer: Outdated Product)
Q.9 Meaning of Monopoly & Oligopoly

CHAPTER 7: STRATEGIC PROFIT MANAGEMENT

IMPORTANT TOPIC
1. Value-Added & Non Value-Added Activities (Manufacturing Cycle Efficiency) 7.19
2. Pareto Analysis 7.37

QUESTIONS ASKED IN THE EXAM

Q.1 Pareto principle based upon the law of – (Answer: Diminishing returns)
A case law similar to TYK 1 (pg 7.42)
Q.2 Calculate manufacturing cycle time
Q.3 Calculate time spent on non-value added activities
Q.4 Calculate delivery cycle time
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CHAPTER 8: AN INTRO TO STRATEGIC PERFORMANCE MANAGEMENT

IMPORTANT TOPIC
1. Z Score 8.35
2. A Score 8.40
3. 7S McKinsey (Flow of 7s, Hard S, Soft S & Order of Implementing) 8.14
4. Relationship Formula (Cross Relationship) 8.15
5. Types of Organizational Structure (Identify Structure) 8.16
6. Value Chain Analysis 8.7
7. Meaning of Matrix Organization, Limitation of network/virtual organisation 8.18,8.19
QUESTIONS ASKED IN THE EXAM
Case Study- McKinsey 7S: Finding of Hard and Soft S elements of the 7-S
framework. (Testing conceptual clarity of 7s)
Q.1 Which of the following statements are incorrect regarding Argenti's A score
model?
1. Mistakes and defects not inter-related.
2. Threshold is Kept at a score of 45.
3. There are three underlying groups (dimensions) i.e., Mistakes, Defects and
Symptoms of failure. (Answer: Both 1 and 2 only)
Q.2 Which coefficient has more weight in the Z score?

Q.3 Z score is helpful in predicting what? (Answer: Bankruptcy)

Q.4 A Co was heavy engineering company involved in setting up & installing P&M
having more than 350 offices in India with 2000 direct employees. From this,
Identify the organisational structure of the company.
Q.5 Formula to calculate no of relations & cross relations. (Answer: n(n+1) & n(n-
1)/2)

CHAPTER 9: STRATEGIC PERFORMANCE MEASURE IN PRIVATE SECTOR

IMPORTANT TOPIC
1. EVA 9.15
2. ROI 9.12
3. Residual Income (RI) 9.9
4. Triple Bottom Line 9.35
5. Building Block Model 9.29
6. Balance Scorecard & Adaptive Balance Scorecard) 9.21
7. Critical Success Factors & KPI -
8. Performance Pyramid (It is called as SMART) 9.29,9.30
9. SMART (Specific Measurable Achievable Relevant Time-Bound) 9.29,9.30
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QUESTIONS ASKED IN THE EXAM

Q.1 Sales Rs. 4,00,000; Variable Cost Rs. 3,00,000; Fixed Cost Rs. 75,000;
Investments Rs. 1,50,000 and desired 20% on investments. What is residual
income? (Answer: -5000)
Q.2 The turnover increase is which dimension of the building block model?
(Answer: Financial Performance)
Q.3 Order of ADAPTED Balanced scorecard?
(Answer: 1) Customer, 2) Financial, 3) Internal, 4) Innovation learning)
Q.4 Which financial performance measure arguably has a strong correlation with
shareholders wealth? (Answer: Net Present Value)
Q.5 The current ROI of both divisions & COC of the company was given. Identify
the correct statement (in ROI (not RI) perspective).
(Answer: Div A manager will not accept because project ROI < his div ROI,
But the project should be accepted because project ROI > Co ROI.)
Q.6 Identify the correct statement about RI & ROI. (related to absolute/relative
measure & goal congruence)
Case Study related to ROI, RI, Financial performance measure
Q.7 Calculation of ROI of 2 divisions from given data.
Q.8 Calculation of RI of 2 div from given data.

Q.9 Level 2 in the performance pyramid shows what??

Q.10 The objective of Level 1?
Q.11 Which is superior to others in the performance pyramid & Balanced
scorecard. (Answer: Performance Pyramid.)
Q.12 Limitation as compared to performance prism
(Answer: The performance pyramid considers only shareholders and
customers whereas the Performance Prism Model considers the
expectations and contributions of all the stakeholders as core)
Q.13 Return of Income (ROI): Sub-organization & relative
Q.14 Residual Income (RI): Absolute

CHAPTER 10: STRATEGIC PERFORMANCE MEASURES IN NPO

IMPORTANT TOPIC
1. Value for Money Framework (Performance Measurement NPO) 10.5

QUESTIONS ASKED IN THE EXAM

Q.1 The Ease of Value for Money Framework (Answer: Economy, Efficiency,
Effectiveness)
Q.2 2 extra Es in Value for Money (VFM)? (Answer: Equity, Ethics)
Q.3 Maximize ratio of input of resources & output of goods, services or other
materials. (Answer: efficiency)
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Q.4 Which one is not a challenging assessment of effectiveness a) Define what

constitutes litter (Answer is in from other 3 options)

CHAPTER 11: PREPARATION OF PERFORMANCE REPORTS

IMPORTANT TOPIC
1. ESG Report 11.7
2. Performance Reports (Types) (Match the following type Ques.) 11.6

QUESTIONS ASKED IN THE EXAM

Q.1 Type of report Integrates scope, schedule, and cost performance using earned
value management techniques (Answer: Earned Value Report)
Q.2 Type of report that Captures the state of the activity at a particular point or
Q.3 project at a particular point in its life cycle. (Answer: Status Report)
Q.4 ESG full form (Answer: ENVIRONMENTAL SOCIAL CORPORATE
GOVERNANCE)
Q.5 Disclosure in ESR reporting (Answer: shed light on a company's ESG activities
while improving investor transparency and inspiring peer organizations)

CHAPTER 12: DIVISIONAL TRANSFER PRICING

IMPORTANT TOPIC
1. Transfer Pricing Conflict -
2. Transfer Pricing Methods -
3. International Transfer Pricing (Refer TYK Q. 8) 12.46
4. Divisional TP Min. & Max. TP (Refer Illustration) 12.14
5. Transfer Pricing Different Capacity Level (Refer Example) 12.16

QUESTIONS ASKED IN THE EXAM

Q.1 Multi-national organizations try to maximize profits by using transfer pricing
as a tool to reduce the tax impact on earnings.

Case Study: XYZ Ltd- South Korean Branch and Brazilian Branch, procuring
through internal transfers 250000 units @35000, Variable cost is 30000, an
external party offer is available to Brazilian branch, now the company has
Q.2 asked South Korean branch (transferor) to look into the matter.
Q.3 Calculate local consumption tax (tax rate, forex rate given)
Q.4 Net P/L to South Korean Subsidiary
Net Benefit/ Deficit to the company

A Case Law similar to TYK 8 (pg 12.46) along with the extra details relating to
indian subsidiary's cost etc if it buys externally:
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Q.5 What will be the impact on indian subsidiary if it buys the products externally
instead of buying from china?
Q.6 What will be the impact on chinese subsidiary if indian subsidiary buys the
products externally? (i.e. calculate net loss/gain)

CHAPTER 13: STANDARD COSTING

IMPORTANT TOPIC
1. All Variances & Interpretation of Variances 13.25
(Most Asked: Planning & Operational variances, Labour variances)
2. Illustration 6, MCQ 11, TYK 4, TYK 9, TYK 10
QUESTIONS ASKED IN THE EXAM
Q.1 Which of these doesn't affect market share variance?
a) sales efforts, b) successful marketing strategy, c) learning curve effect.
(Answer: Learning curve effect)
Q.2 Difference Between Planning & Operational Variance (Answer: A Planning
Variance simply compares a revised standard to the original standard
whereas an Operational Variance simply compares the actual results against
the revised amount)
Q.3 Deciding the selling price of the new product in the market is the most
difficult decision. While doing the variance analysis, the manager of the sales
and marketing department of the company is interested to know which of the
following is not responsible for Sales Price Variance –
a) Higher discounts given to customers to encourage bulk purchases b) Failure
to satisfy demand due to production difficulties
c) Better sales price realization
d) Market conditions or economic conditions forcing changes in prices across
the industry (Answer: b)

Important Tips

❖ Read all these important topics & questions asked in the exam to Secure a
Sure shot of 50+ Marks in the SPOM SET-B (SCPM) Exam.
❖ Must Practice important Illustrations & TYK Questions of ICAI Study Material.
❖ Must Read all Boxes & Highlighted Grey portions of ICAI Study Material
Except Practical Insights and Test your understanding.

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