Assignment on Management Accounting 1) A company running an orchard, with an adequate supply of labour, presents the following data and

requests your advice about the area to be allotted for the cultivation of various types of fruits, which would result in the maximization of profits. The company contemplates growing Apples, Lemons, oranges and peaches. Apples Lemons Oranges Peaches Selling price per box (Rs.) 15 15 30 45 Seasons yield in boxes per acre 500 150 100 200 Cost: Rs. Rs. Rs. Rs. Material per acre 270 105 90 150 Labour: Growing per acre 300 225 150 195 Picking and packing per box 1.50 1.50 3 4.50 Transport per box 3 3 1.50 4.50 The fixed costs in each season would be: Rs. Cultivating and Growing 56,000 Picking 42,000 Transport 10,000 Administration 84,000 Land revenue 18,000 The following limitations are also placed before you: a) The area available is 450 acres, but out of this, 300 acres are suitable for growing only oranges and lemons. The balance of 150 acres is suitable for growing any of the four fruits viz., Apples, Lemons, Oranges and Peaches. b) As the produce may be hypothecated to banks, area allotted for any fruit should be demarcated in complete acres and not in fractions of an acre. c) The marketing strategy of the company requires the compulsory production of all the four types of fruits in a season and the minimum quantity of any one type to 18,000 boxes. Calculate the total profit that would accrue if your advice is accepted. 2) Family Store wants information about the profitability of individual product lines: soft drinks , fresh produce and packaged food. Family store provides the following data for the year 2002-03 for each product line: Soft drinks Rs 7,93,500 6,00,000 12,000 360 300 540 1,26,000 Fresh produce Rs 21,00,600 15,00,000 0 840 2,190 5,400 11,04,000 Packaged food Rs 12,09,000 9,00,000 0 360 660 2,700 3,06,000

Revenues Cost of goods sold Cost of bottles returned Number of purchase orders placed Number of deliveries received Hours of shelf-stocking time Items sold

Family store also provides the following information for the 2002-03 : Activity Bottles returns Ordering Delivery Shelf-stocking Customer support Required: Description Returning of empty bottles Placing of orders for purchases Physical delivery and receipt of goods Stocking of goods on store shelves and on-going restocking Assistance provided to customers including checkout Total cost Rs 12,000 1,56,000 2,52,000 1,72,800 Cost-allocation base Direct tracing to soft drink line 1,560 purchase orders 3,150 deliveries 8,640 hours of shelf-stocking time 3,07,200 15,36,000 items sold

(i) Family Store currently allocates support cost (all costs other than cost of goods sold ) to product lines on the basis of cost of goods sold of each product line. Calculate the operating income as a % of revenues for each product line. (ii) If Family store allocates support costs (all costs other than cost of goods sold ) to product lines using an activity-based costing system , calculate the operating income as a% of revenues for each product line. (iii) Comment on your answers in requirements (i) and (ii). Practical Assignment Select a suitable route (minimum distance be 50 kms) Prepare a cost statement for running the bus route for a month and ascertain cost per passenger per km. You may make assumptions regarding costs but the costs should definitely include Salary to Driver, conductor, Diesel cost, maintenance cost and Depreciation. Ascertain a fare to be charged for the route. Assume your own profit margin. You may assume the seating capacity also.