1.

From the following particular of a manufacturing firm prepare a statement showing (a) cost of material used (b) works cost (c) Cost of production (d) percentage of works overheads to productive wages (e) percentage of general overhead of works cost (10) Stock of materials on 1st Jan., 2010 Purchase of raw material Stock of finished goods on 1st Jan 2010 Productive wages Stock of Materials on 31st Jan 2010 Rs 40,000 Rs 11,00,000 Rs 500000 Rs 500000 Rs 140000 Finished goods sold Works overhead charges Office and general expense Stock of finished goods on 31st Jan 2010 Rs 2400000 Rs 1500000 Rs 100000 Rs 60000

2. E Ltd furnishes the following information for 1000 units of a product manufactured during the year 2001. (10) Material Rs 90000 Direct Wages Rs 60000 Power & consumable stores Rs 12000 Indirect wages Rs 15000 Factory lighting Rs 5500 Cost of rectification of defective work Rs 3000 Clerical salaries & management expenses Rs 33500 Selling expenses Rs 5500 Sale proceed of scrap Rs2000 Repairs, maintenance, deprecation of plant Rs 11500 The net selling price was Rs 31.60 per unit sold and all units were sold

As from 1 1 -2002, the selling price was reduced to Rs 31 per unit. It was estimated that production could be increased in 2002 by 50% due to spare capacity.

Rates for materials and direct wages increased by 10%. You are required to prepare

(a) Cost sheet for year 2001 showing various elements of cost per unit (b) Estimated cost and profit for 2002 (c) Assuming that 15000 units will be produced and sold during the year and factory overheads would be as a percentage of direct wages and office and selling expenses as a % of works cost.

3. In respect of a factory the following particulars have been extracted for the year 2006 Cost of Materials R s600000 Wages Rs 500000 Factory overheads Rs 300000 Administration O H Rs 336000 Selling O H Rs 224000 Distribution O H R s140000 Profit Rs 420000 A work order has to be executed in 2007 and the estimated expenses are material R s8000 and wages Rs 5000. Assume that in 2007 the rate of factory overheads had gone up by 20%, distribution overheads have gone down by 10% & selling and Administration overheads have each gone up by 15%. Factory overheads are based on wages. Administration selling and distribution overheads are based on factory cost. At what price should the product be sold so as to earn the same rate of profit on selling price as in 2006. A company has two projects to choose from. Project x Break even at Rs 320000 and project Y breaks even at Rs 500000. Which project is better to choose? What could be the difference be due to?

4. Three firms X Y and Z manufacture the same product. The selling price is Rs 8 P U of the product equal for all the firms. The fixed cost the firm X, Y and Z respectively are Rs 80000 , Rs 200000 and Rs 330000. While the variable cost per unit are Rs 6, Rs 4 and Rs 3. Determine the break even point for all the firms in units. How much profits are earned b the firms if each of them sells 80000 units.

Q : 1 The following figures are obtained from the budget of a company which is at present working at capacity and producing 13500 units per annum. 90% Rs 100% Rs Sales 1500000 1600000 Fixed expenses 300500 300600 Semi fixed expenses 97500 100500 Variable overhead expenses 145000 149500 Units made 13500 15000 Labour and material costs per unit are constant under present conditions. Profit margin is 10%.

90%

(a) You are required to determine the differential cost of producing 1500 units by increasing capacity to 100 per cent (b) What would you recommend for an export price for these 1500 units taking into account that overseas prices are much lower than indigenous prices? Q : 2 Ulfa ltd produces a single product in its plant. This product sells for Rs100 per unit. The standard production cost per unit is as follows: Raw material (5 kgs @ Rs 8) Rs 40 Direct labour ( 2 hours @ Rs 5) Rs 10 Variable manufacturing overheads Rs 10 Fixed manufacturing overheads 20 The plant is currently operating at full capacity of 100000 units per years on a single shift. This output is inadequate to meet the projected sales. manager has estimated that the firm will lose sales of 40000 units next years if the capacity is not expanded Plant capacity could be doubled by adding a second shift. This would require additional out of pocket fixed manufacturing overhead costs of Rs 1000000 annually. Also, a night work wage premium equal to 25% of the standard wage would have to be paid during the second shift. However, if annual production volume were 130000 units or more, the company could take advantage of 2% quantity discount on its raw material purchases. You are required to advise whether it would be profitable to add the second shift in order to obtain the sales volume of 40000 units per year?

Q : 3 Gujarat Timber Merchants annually manufacture 10,000 chairs at a cost of Rs 80 per chair and there is a home market for the entire volume of production at the sale price of Rs 85 per chair. In the current year there is a fall in the demand and so 10,000 chairs can be sold only at Rs 74.4 per chair. The analysis of cost for 10,000 chairs is : Material Rs 300000 Wages Rs 220000 Fixed Overheads Rs 160000 Variable Overheads Rs 120000 The foreign market explored and it is found that 20000 chairs can be sold at Rs 71.10 per chair. The fixed overhead will increase by 10% on additional production of 10000 chairs? Is it worthwhile to try to capture foreign market?

Q : 1 AB ltd is organized into two large divisions A and B. Division A produces a component which is used by division B in making a final product. The final product is sold for Rs 480. Division A has a capacity to produce 2400 units and the entire quantity can be purchased by division B. Division A informed that due to installation of new machines, its depreciation cost has gone up and hence wanted to increase the price of the component to be supplied do division B at Rs 264. Division B, however, can buy the component from the outside market at Rs 264 each. The variable cost is division A is Rs 228 and fixed cost is Rs 24 per component. The variable cost of division B in manufacturing the final product by using the component is Rs 180 (excluding the component cost). If division B purchases the entire component from division A. calculate the total contribution of the company. Q : 2 The operating statement of a company is as follows: Sales (80,000 units @ Rs15): R s 1200000 Variable cost: Material 240000 Labour 320000 Overheads 160000 Total variable cost : 720000 Fixed : 320000 Profit 160000 The plant capacity is 100000 units. A customer from USA is desirous of buying 20000 at a net price of Rs 10 per unit. Advice the company whether or not the offer should be accepted? Will your advise be different if the customer is a local one? Q : 3 A department attaints a sale of Rs 600000 at 80% of its normal capacity and its expenses are given below: Administrative Exp. Rs. Selling cost Rs. Office Salaries 90,000 Salaries 8% of sales General Expenses 25 of sales Travelling Exp. 2% of Sales Depreciation 7500 Sales office Exp 1% of Sales Rates & taxes 8750 General Exp 1% of sales The distribution cost is: Wages Rs 15000. Rent 1% of sales and other expenses 4% of sales. Draw up a flexible administration overhead, selling and distribution overhead cost budget, operating at 80%, 90%, 100% and 110% normal capacity