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K.

HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

PROBLEMS ON MARGINAL COSTING


1. The following data is given:
Selling price
20 per unit
Variable manufacturing costs
11 per unit
Variable selling costs
3 per unit
Fixed factory overheads
5, 40,000 per year
Fixed selling costs
2, 52,000 per year
You are required to compute:
(i)
break even point expressed in amount of sales in rupees
(ii)
number of units that must be sold to earn a profit of Rs.60,000 per year
(iii) How many units must be sold to earn a net income of 10% of sales?
2. A company annually manufacture and sells 20000 units of a product, the selling
price of which is Rs.50 and profits earned is Rs.10 per unit.
The analysis of cost of 20,000 units is:
Material cost
Rs.3, 00,000
Labor cost
Rs.1, 00,000
Overheads
Rs.4, 00,000 (50% variable)
You are required to compute:
(i)
break even sales in units and in Rupees
(ii)
sales to earn a profit of Rs.3,00,000
(iii) Profit when 15,000 units were sold.
3. Electro Company sold 10,000 units last year at a price of Rs.500 each. The cost
structure per unit is as follows:
Materials
100
Labor
50
Variable overheads
25
Fixed overheads
200
Due to competition the price has to be reduced to Rs.425 for the coming year.
Assuming that there will no change in costs, find out how many units shall be sold to
ensure the same amount of total profit as last year.
4. (A) company has fixed expenses of Rs.90, 000 with sales at Rs.3, 00,000 and a
profit of rs.60, 000. Calculate the profit volume ratio. If in the next period the
company suffered a loss of Rs.30, 000. Calculate the sales volume.
(b) What is the margin of safety for a profit of Rs.60, 000 in (a) above?
4. Sultan plastic company makes plastic buckets. An analysis of their accounting
reveals:
Variable cost per bucket
Rs.20
Fixed cost
Rs.50,000 for the year
Capacity
2,000 buckets per year
Selling price per bucket
Rs.70
Required:
(i)
find the break-even point
(ii)
find the number of buckets to be sold to get a profit of Rs.30,000

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

(iii)

If the company can manufacture 600 buckets or per year with an additional
fixed cost of Rs.2, 000. what should be the selling price to maintain the profit
per bucket as at (ii) above
5. you are given the following data:
Year
sales
profits
2004
Rs.1, 20,000
Rs.8, 000
2005
Rs.1, 40,000
Rs.13, 000
Find out
(i)
P/V ratio
(ii)
B.E. Point
(iii) Profit when sales are Rs.1,80,000
(iv)
Sales required to earn a profit of Rs.12,000
(v)
Margin of safety in year 2005
6. The following figures relating to the performance of a company of the years I and
II are available. Assuming that (i) the ratio of variable cost to sales, and (ii) the
fixed costs are the same for both the years. Ascertain:
(a) the profit volume ratio
(b) the amount of the fixed costs
(c) the break even point, and
(d) The budgeted profit for the year III, if the budgeted sales for that year are Rs.1
crore.
7. A company sold in two successive periods 7,000 units and 9,000 units and has
incurred a loss of Rs.10, 000 and earned Rs.10, 000 as profit respectively. The
selling price per unit can be assumed at Rs.100.
You are required to calculate:
(a) the amount of fixed cost
(b) the number of units to break-even
(c) the number of units to earn a profit of Rs.40,000
8. given below are the sales and profits of the two halves of the year:
I st half
II nd half
Sales
Rs.1, 00,000 1, 20,000
Profit
Rs30, 000
38,000
Fixed cost during the first half is equal to that during the second half. Selling price and
per unit variable cost remain unchanged. Calculate the following:
(i)
P/V ratio for each half and the full year
(ii)
Fixed cost for each half and for the full year
(iii) BEP for each half and for the full year
(iv)
Half-yearly sales to earn half-yearly profit of Rs.40,000
(v)
Annual sales to earn annual profit of Rs.90,000
9. A company has annual fixed costs of Rs.14, 00,000. In 2004 sales amounted to
rs.60, 00,000 as compared to Rs.45, 00,000 in 2003. And profit in 2004 was Rs.4,
20,000 higher than in 2003.
(i)
At what level of sales does the company break-even?
(ii)
determine profit or loss on a precast sales volume of Rs.80,00,000

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

(iii)

If there is a reduction in selling price in 2005 by 10% and the company desires
to earn the same profit as in 2004, what would be the required sales volume?
10. A, B and C are three similar plants under the same management who want them to
be merged for better operation. The details are as under:
Plant
A
B
C
Capacity operated
100%
70%
50%
Rs lakhs
Rs. Lakhs
Rs. Lakhs
Turnover
300
280
150
Variable cost
200
210
75
Fixed cost
70
50
62
Find out:
(i)
the capacity of the merged plant for break-even
(ii)
The profit at 75% capacity of the merged plant.
(iii) The turnover from the merged plant to give a profit of Rs.28 lakhs
11. ABC Ltd. Manufacture and sells four types of products under the brand names
A,B,C and D. the sales mix in value comprises 33 %, 41 2/3%, 16 2/3%, 8 1/3%
of A,B,C and D respectively. The total budgeted sales (100%) are Rs.60, 000 per
month. Operating costs are as follows:
Variable costs:
Product
A
60% of selling price B
68% of selling price
C
80% of selling price D
40% of selling price
Fixed cost is Rs.14, 700 per month
Calculate the break event point for the products on an overall basis.
(b) It has been proposed to change the sales mix as follows, the total sales per month
remaining Rs.60, 000.
Product

A
25%
B
40%
C
30%
D
5%
Assuming that proposal is implemented, calculate the break-even point.
12. Company A and Company B, both under the same management, makes and sells
the same type of product. Their budgeted profit and loss account for June are as
under:
Company A
company B
Sales
3,00,000
3,00,000
Less: variable cost
2,40,000
2,00,000
Fixed cost
30,000
2,70,000
70,000
2,70,000
Profit
30,000
30,000
You are required to:
(i)
calculate the break-even point for each
(ii)
calculate the sales volume at which each of the two companies will make a
profit of Rs.10,000
(iii) Assess how their profitability will change with increase or decrease in sales
volume.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

13. Two firms A-limited and X-limited are identical and are under the same
management. Their budgeted profit and loss accounts for the year ending 31st
December 2008 are as follows:
Particulars
A-Limited
X-Limited
Sales
Rs.3, 33,000
Rs.3, 33,000
Less variable Costs Rs.2, 44,000
Rs.2, 00,000
Fixed costs Rs.35, 000 Rs.2, 79,000 Rs.79, 000
Rs.2, 79,000
Profit
Rs.54, 000
Rs.54, 000
you are required to find:
(i)
The BEP for A-Limited and X-Limited.
(ii)
The sales volume at which each of the two firms will make a profit of
Rs.15,000
(iii) Which firm is likely to earn greater profits when the demand for the
product is high and low?
14. The united vision limited is considering expansion. Fixed assets amount to Rs.4,
60,000 and are expected to increase by Rs.1, 40,000 when plant expansion is
completed. The existing plant capacity is 32,000 units a year. Capacity will
increase by 50 per cent with the expansion. Variable costs are currently Rs.17 per
unit and are expected to go down by Re.1 per unit with the expansion. The current
selling price is Rs.40 per unit and is expected to remain same under either
alternative. What are the break-even points under either alternative? Which
alternative is better and why?
15. reprographics Ltd., manufactures a document reproducing machine which has a
variable cost structure as follows:
Rs.
material
40
labour
10
Overhead
4
And a selling price of Rs.90
Sales during the current year are expected to be Rs.13,50,000 and fixed overhead
Rs.1,40,000.
Under a wage agreement, an increase of 10% is payable to all direct workers from the
beginning of the forthcoming year, while material costs are expected to increase by 7
%, variable overhead costs by 5% and fixed overhead costs by 3%.
You are required to calculate:
(i)
The new selling price, if the current profit/volume reatio is to be maintained.
(ii)
The quantity to be sold during the forthcoming year to yield the same amount
of profit as the current year assuming the selling price to remain at Rs.90.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

Decision making problems in Marginal Costing


Make or Buy decision
1.A radio manufacturing company finds that while it costs Rs.6.25 to make component R518, the same is available in the market at Rs.5.75 each, with an assurance of continued
supply. The break-down of the cost is:
Rs.
Materials
2.75 each
Labor
1.75 each
Other variables
0.50 each
Depreciation and other fixed costs 1.25 each
6.25
(a) Should you make or buy?
(b) What would be your decision, if the supplier offered the component at Rs.4.85
each?
2. Auto parts Ltd. Has an annual production of 90,000 units for a motor component. The
component cost structure is as below:
Materials
270 per unit
Labor (25% fixed)
180 per unit
Expenses:
Variable
90 per unit
Fixed
135 per unit
Total
675 per unit
(a) The purchase manager has an offer from a supplier who is willing to supply the
component at Rs.540. should the component be purchased and production
stopped?
(b) Assume the resources now used for this components manufacture are to be used
to produce another new product for which the selling price is Rs.485.
In the latter case, the material price will be Rs.200 per unit. 90,000 units of this
product can be produced at the same cost basis as above for labor and expenses.
Discuss whether it would be advisable to divert the resources to manufacture that
new product, on the footing that the component presently being produced would,
instead of being produced, be purchased from the market.
Product mix / Sales mix decision
1. The following production/sales mix are capable of achievement in a factory:
(i)
2,000 units of product A and 2,000 units of product C.
(ii)
4,000 units of product B.
(iii) 1,000 units of product A, 2,000 units of product B and 1,600 units of
product C.
Cost per unit is as follows:
A
B
C
Direct Materials Rs.
20
16
40
Direct wages Rs.
8
10
20
Fixed cost is Rs 20,000 and variable overheads per unit of A,B and C are Rs.2,
Rs.4, and Rs.8 respectively. Selling prices of A, B and C are Rs.36, Rs.40, and
Rs.100 per unit respectively.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

Determine the marginal contribution per unit of A, B and C and the profits
resulting from product mixes (i), (ii) and (iii).
2. A multi product company provides the following costs and output data for the last
year.
Products
X
Y
Z
Sales mix
40%
35%
25%
Selling price
20
25
30
Variable cost per unit
10
15
18
Total fixed cost
Rs.1, 50,000
Total sales
Rs.5, 00,000
The company proposes to replace product Z by product S. estimated cost and output data
are:
X
Y
S
Sales mix
50%
30%
20%
Selling price
20
25
28
Variable cost per unit
10
15
14
Total fixed cost
Rs.1, 50,000
Total sales
Rs. 5, 00,000
Analyses the proposed change and suggest what decision the company should take.
3 .A manufacturing company produces and sells three products P, Q and R. it has an
available machine hour capacity of one lakh hours, interchangeable among the three
products. Presently the company produces and sells 20,000 units of P and 15,000 each of
Q and R. the unit selling price of the three products are Rs.25, Rs.32 and Rs.42 for P, Q
and R respectively. With this price structure and the aforesaid sales-mix, the company is
incurring loss. The total expenditure, exclusive of fixed charges (presently Rs.5 per unit),
is Rs.13.75 lakhs. The unit cost ratio amongst the products P, Q and R is 4:6:7. Since the
company desires to improve its profitability without changing its cost and price
structures, it has been considering the following three mixes so as to be within its total
available capacity.
Products
Mix I
Mix II
Mix III
P
25,000
20,000
30,000
Q
15,000
12,000
5,000
R
10,000
18,000
15,000
You are required to compute the quantum of loss now being incurred and advise the most
profitable mix which could be considered by the company.
4. The following particulars are taken from the records of a company engaged in
manufacturing two products A and B, from a certain material:
Product A
product B
Sales
2,500
5,000
Material cost (Rs.50 per kg)
500
1250
Direct labor (Rs.30 hour)
750
1500
Variable overhead
250
500
Total fixed overheads: Rs.10, 00,000
Comment on the profitability of each product when:
(i)
Total sales in value are limited.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

(ii)
(iii)
(iv)

Raw material is in short supply


Production capacity is the limiting factor
Total availability of raw material is 20,000 kg. and maximum sales potential
of each product is 1,000 units. Find the product mix to yield maximum profits.
Key or limiting factor
1. A company manufactures three products. The budgeted quantity, selling prices and
unit costs are as under
A
B
C
Rs.
Rs.
Rs.
Raw materials @ Rs.20 per kg.
80
40
20
Direct wages @ Rs. 5 per hour
5
15
10
Variable overheads
10
30
20
Fixed overheads
9
22
18
Budgeted production in units
6400
3200
2400
Selling price per unit
140
120
90
Required:
(i) Present a statement of budgeted profit.
(ii) Set optimal product-mix and determine the profit, if the supply of raw materials is
restricted to 18,400 Kg.
2. From the following particulars, find the most profitable product mix and prepare a
statement of profitability of that product-mix:
Product A
Product B
Product C
Units budgeted to be produced
And sold
1800
3000
1200
Selling price per unit
60
55
50
Direct material required
Per unit (kg)
5
3
4
Direct labor per unit (hrs)
4
3
2
Variable overheads (Rs)
7
13
8
Fixed overheads (Rs)
10
10
10
Cost of direct material per kg
4
4
4
Direct labor hour rate
2
2
2
Maximum possible units of sale
4000
5000
1500
All the three products are produced from the same direct material using the same type of
machine and labor. Direct labor which is the key factor is limited to 18,600 hours.
3. X Y Ltd. Is manufacturing three household products A, B and C and selling them in a
competitive market. Details of current demand, selling price and cost structure are given
below:
A
B
C
Expected demand (units)
10,000
12,000
20,000
Selling price per unit
20
16
10
Variable cost per unit
Direct materials (Rs.10/kg)
6
4
2
Direct labor (Rs.15/hr)
3
3
1.5
Variable overheads
2
1
1
Fixed overhead per unit
5
4
2

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

The company is frequently affected by acute scarcity of raw material and high labor
turnover. During the next period, it is expected to have one of the following situations:
(a) raw materials available will be only 12,100 kg
(b) Direct labor hours available will be only 5000 hrs.
(c) It may be possible to increase sales of any one product by 25% with out any
additional fixed costs but by spending Rs. 20,000 on advertisement. There will be
no shortage of materials or labor.
Suggest the best production plan in each case and the resultant profit that the company
would earn according to your suggestion.
Discontinuance of a product line
1. Pee kay Ltd. Is engaged in three distinct lines of production. Their production cost per
unit and selling prices as under
A
B
C
Production (units)
3000
2000
5000
Material cost
18
26
30
Wages
7
9
10
Variable overhead
2
3
3
Fixed overheads
5
8
9
Total cost
32
46
52
Selling price
40
60
61
Profit
8
14
9
The management wants to discontinue one line and gives you the assurance that
production in two other lines shall rise by 50%. They intend to discontinue the line which
produces article A as it is less profitable.
(a) Do you agree to the scheme in principle? If so, do you think that the line which
produces A should be discontinued.
(b) Offer your comments and show the necessary statements to support your decision.
2. An industrial concern which had no costing system appointed a cost accountant. After
installing a system of collection of cost data, the cost accountant observed that out of the
three products which are produced independent of each other, loss is being incurred in
product B. he immediately decides to advise management to discontinue manufacture of
this product supported by the following tabulation:
Product A
product B
product C
Sales
1,00,000
65,000
4,90,000
Variable manufacturing cost
52000
26000
140000
Fixed manufacturing overhead
(Apportioned)
6500
19000
105000
Variable selling and
Distribution cost
18,000
17,000
18,000
Fixed selling and distribution
Cost
4600
4600
4000
Total cost
81000
66600
267000
Net profit
18900
----223000
Net loss
--1600
-------

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

Do you agree with the cost accountants conclusion? Argue with your views on the basis
of data.
Shut down or continue
1.A ltd is experiencing recessionary difficulties and as a result its directors are
considering whether or not the factory should be closed down till the recession has
passed.
A flexible budget is compiled giving the following details
Fixed costs
production capacity
(fixed cost + variable costs)
Close down normal
40% 60% 80% 100%
Factory overhead
6000 8000
10000 11000 12000 13000
Admin overhead
4000 6000
6500 7000 7500 8000
Selling & dist o.h.
4000 6000
7000 8000 9000 10000
Miscellaneous
1000 1000
1500 2000 2500 3000
Direct labor
------10000 15000 20000 25000
Direct material
------12000 18000 24000 32000
The following additional information has been supplied to you.
(i)
present sales at 50% capacity are estimated at Rs30000 per annum
(ii)
Estimated costs of closing down are Rs4500. in addition maintenance of plant
and machinery is expected to amount to Rs800 per annum.
(iii) Costs of reopening after being closed down are estimated to be Rs.2000 for
overhauling of machines and getting ready and Rs1400 for training of
personnel.
(iv)
Market research investigation reveals that sales should take an upward swing
to around 70% capacity at prices which would produce revenue of Rs1,00,000
in approximately twelve months time.
You are required to advise the directors whether to close down for twelve months or
continue operations indefinitely.

PROBLEMS ON BUDGETARY CONTROL


FLEXIBLE BUDGET
1. Prepare flexible budget for the overheads of Damyanti Ltd. From the following data
and ascertain the overhead rates based on direct labor hrs. at 50%, 60% and 70%
capacity:
At 60% capacity
Variable overheads:
Indirect material
Rs.6000
Indirect labor
Rs.18000
Semi-variable overheads:
Electricity (40% fixed, 60% variable)
Rs.30000
Repair (80% fixed, 20% variable)
Rs3000
Fixed overheads:
Depreciation
Rs.16500

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

Insurance
Rs.4500
Salaries
Rs.15000
Estimated direct labor hours 186000 hrs.
2. The following data are available in a manufacturing company for a yearly period:
Rs.lakhs
Fixed expenses:
Wages and salaries
9.5
Rent,rates and taxes
6.6
Depreciation
7.4
Sundry administration expenses
6.5
Semi variable expenses (at 50% capacity)
Maintenance and repairs
3.5
Indirect labor
7.9
Sales department salaries
3.8
Sundry admin expenses
2.8
Variable expenses (at 50% capacity)
Materials
21.7
Labor
20.4
Other expenses
7.9
Total cost
98
Assume that the fixed expense remain constant for all levels of production: semi-variable
expenses remain constant between 45% and 65% capacity, increasing by 10% between
65% and 80% capacity and by 20% between 80% and 100% capacity.
Sales at various levels are:
50% capacity
Rs.100 lakhs
75%capacity
Rs. 150 lakhs
60% capacity
Rs.120 lakhs
90%capacity
Rs. 180 lakhs
100%capacity
Rs.200 lakhs
Prepare a flexible budget for the year and forecast the profit at 60%, 75%, 90% and 100%
of capacity.
3. The expenses budgeted for production of 10,000 units in a factory are furnished below:
Rs per unit
Materials
70
Labor
25
Variable overheads
20
Fixed overheads (Rs. 100000)
10
Variable expenses (direct)
5
Selling expenses (10% fixed)
13
Distribution expenses (20% fixed)
7
Administration expenses (Rs50000)
5
Total
155
Prepare a budget for the production of (a) 8000 units and (b) 6000 units.
Assume that administration expenses are rigid for all levels of production.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

4. A department of Alstom India company attains sales of Rs. 6,00,000 at 80% of its
normal capacity. Its expenses are given below:
Office salaries
Rs.90,000
General expenses
2% of sales
Depreciation
7,500
Rent rates
8,750
Selling cost:
Salaries
8% of sales
Travelling expenses
2% of sales
Sales office
1% of sales
General expenses
1% of sales
Distribution cost:
Wages
15,000
Rent
1% of sales
Other expenses
4% of sales
Draw up flexible Administration, selling and distribution costs budget, operating at 90%,
100% and 110% of normal capacity.
5. The budget manager of Jupiter Electricals Limited is preparing flexible budget for the
accounting year starting from 1 July, 2006.
The company produces one product-Detx II. Direct material costs Rs.7 per unit. Direct
labor averages Rs2.5 per hour and requires 1.6 hours to produce one unit of DetxII.
Salesmen are paid a commission of Re 1 per unit sold. Fixed selling and administrative
expenses amount to Rs.85,000 per year.
Manufacturing overhead is estimated in the following amounts under specified volumes:
Volume of production (in units)
1, 20,000
1, 50,000
Expenses:
Indirect material
2, 64,000
3, 30,000
Indirect labor
1, 50,000
1, 87,500
Inspection
90,000
1, 12,500
Maintenance
84,000
1, 02,000
Supervision
1, 98,000
2, 34,000
Depreciation of plant and equipment
90,000
90,000
Engineering services
94,000
94,000
Total manufacturing overhead
9, 70,000
11, 50,000
Prepare a Total Cost Budget for 1,40,000 units of production.
CASH BUDGET
1. Bajaj Co. wishes to arrange overdraft facilities with its bankers during the period from
April to June 2006 when it will be manufacturing mostly for stock. Prepare a Cash
Budget for the above period from the following data, indicating the extent of the band
overdraft facilities the company will require at the end of each month.
(a)
Month
Sales
Purchases
Wages
Rs.
Rs.
Rs.
February
90,000
62,400
6,000
March
96,000
72,000
7,000

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

April
54,000
1,21,000
5,500
May
87,000
1,23,000
5,000
June
63,000
1,34,000
7,500
(b) 50% of Credit sales are realized in the month following the sales and the remaining
50% in the second month following.
(c) Creditors are paid in the month following the month of purchase.
(d) Lag in payment of wages one month.
(e) Cash at bank on 1st April, 2006 estimated at Rs. 12,500.
Answer: Closing balance for April Rs. 26,500; May Rs. (25,500) and June Rs. (83,000)
2. Draw up a Cash Budget for January to March 2006 from the following information:
(a). Cash and bank balance on 1st January, 2006 Rs. 2,00,000.
(b). Actual and budgeted sales:
Actual
2005 Rs.
Budgeted
2006 Rs.
September
6,00,000
January
8,00,000
October
6,50,000
February
8,20,000
November
7,00,000
March
8,90,000
December
7,50,000
(c). Purchases actual and budgeted:
Actual
2005 Rs.
Budgeted
2006 Rs.
September
3,60,000
January
4,80,000
October
4,00,000
February
4,00,000
November
4,80,000
March
5,00,000
December
4,50,000
(d). Wages actual and budgeted:
Month
Wages (Rs.)
Expenses (Rs.)
Actual 2005
November
1,50,000
50,000
December
1,50,000
60,000
Budgeted 2006
January
1,80,000
60,000
February
1,80,000
80,000
March
2,00,000
80,000
(e) Special items:
(i) Advance Payment of tax in March 2006 Rs. 50,000
(ii) Plant to be acquired and paid in January 2006 Rs. 1,00,000
(f) Assume 10 % sales and purchases are on cash basis.
(g) Lag in payment of wages month
(h) Lag in payment of expenses month
(i) Period of credit allowed to debtors 2 month
(j) Period of credit allowed by creditors 1 month
(Answer: January Rs.1,32,000; February Rs.1,62,000 and March Rs. 2,41,000)

K. HARI KRISHNA

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MBA,MCOM, M.Phil,(PhD),(ICWAI)

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3. From the following forecasts of income and expenditure, prepare a cash Budget for the
month January to April, 2006.
Months

Sales
(Credit)

Purchases
(Credit)

Wages Manufacturing Administrative Selling


expenses
expenses
expenses

Rs.
Rs.
Rs.
Rs.
Rs.
Rs.
Nov. 30,000
15,000
3,000 1,150
1,060
500
Dec. 35,000
20,000
3,200 1,225
1,040
550
2006 Jan. 25,000
15,000
2,500 990
1,100
600
Feb. 30,000
20,000
3,000 1,050
1,150
620
Mar. 35,000
22,500
2,400 1,100
1,220
570
Apr. 40,000
25,000
2,600 1,200
1,180
710
Additional information is as follows:
1. The customers are allowed a credit period of 2 months.
2. A dividend of Rs. 10,000 is payable in April.
3. Capital expenditure to be incurred: Plant purchased on 15th of January for Rs.5,000;
4. A building has been purchased on 1st March and the payments are to be made in
monthly instalments of Rs. 2,000 each.
5. The creditors are allowing a credit of 2 months.
6. Wages are paid on the 1st of the next month.
7. Lag in payment of other expenses is one month.
8. Balance of cash in hand on 1st January, 2006 is Rs. 15,000
(Answer: Closing balance for January Rs. 18,985; February Rs. 28,795; March Rs.
30,975 and April Rs. 23,685)
4. From the following budget date, forecast the cash position at the end of April, May and
June 2006.
Months
Sales (Rs.)
Purchases (Rs.)
Wages (Rs.) Mis. Expenses (Rs.)
February
1,20,000
84,000
10,000
7,000
March
1,30,000
1,00,000
12,000
8,000
April
80,000
1,04,000
8,000
6,000
May
1,16,000
1,06,000
10,000
12,000
June
88,000
80,000
8,000
6,000
Additional information:
1. Sales: 20% realized in the month of sale; discount allowed 2%. Balance realized
equally in two subsequent months.
2. Purchases: These are paid in the month following the month of supply.
3. Wages: 25% paid in arrears following month.
4. Miscellaneous expenses: Paid a month in arrears.
5. Rent: Rs.1,000 per month paid quarterly in advance due in April.
6. Income Tax : First instalment of advance tax Rs. 25,000 due on or before 15th June.
7. Income from investments: Rs. 5,000 received quarterly in April, July, etc.
8. Cash in hand: Rs. 5,000 on 1st April, 2006.
(Answer: April Rs. 5,680; May Rs. (-) 7,084 and June Rs. (-) 62,936

2005

K. HARI KRISHNA

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5. From the following budgeted figures prepare a Cash Budget in respect of three months
to June 30, 2006.
Month
Sales
Materials
Wages
Overheads
Rs.
Rs.
Rs.
Rs.
January
60,000
40,000
11,000
6,200
February
56,000
48,000
11,600
6,600
March
64,000
50,000
12,000
6,800
April
80,000
56,000
12,400
7,200
May
84,000
62,000
13,000
8,600
June
76,000
50,000
14,000
8,000
Additional information:
1. Expected Cash balance on 1st April, 2006 Rs. 20,000
2. Materials and overheads are to be paid during the month following the month of
supply.
3. Wages are to be paid during the month in which they are incurred.
4. All sales are on credit basis.
5. The terms of credits are payment by the end of the month following the month of sales:
Half of credit sales are paid when due the other half to be paid within the month
following actual sales.
6. 5% sales commission is to be paid within in the month following sales
7. Preference Dividends for Rs. 30,000 is to be paid on 1st May.
8. Share call money of Rs. 25,000 is due on 1st April and 1st June.
9. Plant and machinery worth Rs. 10,000 is to be installed in the month of January and
the payment is to be made in the month of June.
PRODUCTION & PURCHASE BUDGET
1.The sales of a concern for the next year is estimated at 50,000 units. Each unit of the
product requires 2 units of Material A and 3 units of Material B. The estimated
opening balances at the commencement of the next year are:
Finished Product : 10,000 units
Raw Material A : 12,000 units
Raw Material B : 15,000 units
The desirable closing balances at the end of the next year are:
Finished Product : 14,000 units
Raw Material A : 13,000 units
Raw Material B : 16,000 units
Prepare the materials purchase budget for the next year.
2. From the following particulars, prepare production cost budget for June,2006.
Particulars
Opening Stock
Closing stock
(1-6-2006)
(30-6-2006)
Finished Goods
1200 units
1600 units
Raw Material A
5,000 kgs.
4,800 kgs.
Raw Material B
2,000 kgs.
3,100 kgs.
Raw Material 4 kgs. @ Rs.8 per kg.
2 kgs. @ Rs.25 per kg.
required (per unit)

K. HARI KRISHNA

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Budgeted sales for the month 7,000 units.


(Answer: Raw Material A Rs. 2,35,200; Raw Material B Rs. 3,97,500)
3. From the following figures prepare Raw Materials Purchase Budget.
Materials (in Units)
Particulars
A
B
C
D
Estimated Opening Stock
16,000
6,000
24,000
2,000
Estimated Closing Stock
20,000
8,000
28,000
4,000
Estimated Consumption
1,20,000
44,000
1,32,000
36,000
Standard Price per unit
0.25 p
0.05 p
0.15 p
0.10 p
(Answer: Material A Rs. 31,000; Material B Rs. 2,300; Material C
PROBLEMS ON STANDARD COSTING (VARIANCE ANALYSIS)
Material Variance Problems
1. From the following information compute possible material variances.
Standard
Actual
Quantity
Unit Total Quantity
Unit Total
(Kg.)
Price
(kg)
Price
Material A
4
1
4
2
3.5
7
Material B
2
2
4
1
2
2
Material C
2
4
8
3
3
9
Total
8
2
16
6
3
18
2. The standard mix to produce one unit of product is as follows:
Material A
60 units @ Rs.15 per unit
=
900
Material B
80 units @ Rs.20 per unit
=
1,600
Material C
100 units @Rs.25 per unit =
2,500
240 units
5000
During the month of July, 10 units were actually produced and consumption was
as follows:
Material A
640 nits @ Rs.17.50 per unit =
11,200
Material B
950 units @Rs.18 per unit =
17,100
Material C
870 units @Rs.27.50 per unit =
23,925
Calculate all material variances.
3. The standard material cost to produce one tone of chemical X is:
300 kg of material A @ Rs.10 per kg
400 kg of material B @ Rs.5 per kg
500 kg of material C @ Rs.6 per kg
During a period, 100 tones of chemical X were produced from the usage of:
35 tones of material A at a cost of Rs.9, 000 per tone
42 tones of material B at a cost of Rs.6, 000 per tone
53 tones of material C at a cost of Rs.7, 000 per tone
Calculate material variances.
4. The standard cost of a chemical mixture is as follows:
40% material A at Rs.20 per kg
60% material B at Rs.30 per kg

K. HARI KRISHNA

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A standard loss of 10% of input is expected in production. The cost records for a
period showed the following usage:
90 kg material A at a cost of Rs.18 per kg
110 kg material B at a cost of Rs.34 per kg
The quantity produced was 182 kg of good product.
Calculate all material variances.
5. The standard material input required for 1,000 kgs of a finished product are given
below:
Material
Quantity
st. rate per kg.
Kg
Rs.
P
450
20
Q
400
40
R
250
60
1100
Standard loss
100
Standard output
1000
Actual production in a period was 20,000 kg of finished product for which the actual
quantities of material used and the prices paid thereof were as under:
Material
Quantity
purchase price per kg
Kg
Rs
P
10,000
19
Q
8,500
42
R
4,500
65
Calculate material variances.
Labor variance problems
1. Coated India ltd manufactures a particular product, the standard direct labor cost of
which is Rs.120 per unit whose manufacture involves the following:
Grade of
Hours
Rate
Amount
Workers
Rs.
Rs.
A
30
2
60
B
20
3
60
50
120
During a period 100 units of the product were produced, the actual labor cost of
which was as follows:
Grade of
Hours
Rate
Amount
Workers
Rs.
Rs.
A
3200
1.5
4800
4
7600
B
1900
5100
12400
Calculate labor variances.

K. HARI KRISHNA

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2. The standard labor employment and the actual labor hours engaged in a week for a
job are as under:
Skilled
Semi-skilled Unskilled
Standard no of workers in the gang
32
12
6
Actual no of workers employed
28
18
4
Standard wage rate per hour
3
2
1
Actual wage rate per hour
4
3
2
During the 40 hours working week, the gang produced 1,800 standard labor hours of
work.
Calculate labor variances.
3. The details regarding the composition and the weekly wage rates of labor force
engaged on a job scheduled to be completed in 30 weeks are as follows:
Standard
Actual
Category of
no of workers weekly wage no of workers weekly wage rate
Workers
rate per worker
per worker
Skilled
75
Rs.60
70
Rs.70
Semi-skilled
45
Rs.40
30
Rs.50
Unskilled
60
Rs.30
80
Rs.20
The work is actually completed in 32 weeks. Calculate the all labor variances.
4. A group of 10 skilled and 20 unskilled workers were expected to produce 400 kg of
chemical BXT in an 8 hour day. The standard hourly wage rate was fixed at Rs.25
and Rs.15 respectively.
Actually, a group of 15 skilled and 10 un skilled workers was deployed and paid for 8
hours day at an hourly wage rate of Rs.22 and Rs.18 respectively. Two hours were
wasted for the entire group due to power failure and only 300 kg of BXT was
produced.
You are required to compute all labor variances.
5. A gang of workers normally consists of 30 men, 15 women and 10 boys. They are
paid at standard rates per hour as Man-Re0.80, Woman-Re0.60, and Boy-Re0.40.
In a normal working week of 40 hours, the gang is expected to produce 2,000 units of
output.
During the week ended 31 December, the gang consisted of 40 men, 10 women, and 5
boys. The actual wages paid were @ Re0.70, Re0.65, and Re0.30 respectively. 1600
units were produced. Four hours were lost due to abnormal idle time.
Calculate labor variances.
Sales Variances
1. The following data relates two products X and Y.
Product
Budget
Actual
Oty
Price Value
Qty Price
Value
X
1000
5
5000
1200 6
7200
Y
1500
10
15000
1400 9
12600
Total
2500
20000
2600
19800
Calculate sales variances by turnover method.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

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2. SK Ltd. furnishes the following information relating to budgeted sales and


actual sales for April.
Product
sales quantity
selling price
Units
per unit Rs.
Budgeted Sales
A
1200
15
B
800
20
C
2000
40
Actual sales
A
880
18
B
880
20
C
2640
38
Calculate sales variances.
3. The following data is supplied to you for the month of January 2006. calculate
sales variances.
Product

Budgeted
Quantity

Actual
Quantity

X
Y

240
160

400
200

Budgeted sale Actual sale standard cost


price per unit price per unit per unit
50
25

45
20

30
15

4. A company used standard costing system. The sales data for a period are as
under:
Product
Budgeted
Budgeted sale
Actual
sale Actual
Sales units price per unit
units
sales
A
1280
B
3200
C
1920
Cost data are as under:
Standard cost per unit (Rs)
Actual cost per unit (Rs)
Calculate sales variances

20
12
16

650
3900
1950

12350
50700
29250

A
16
18

B
10
12

C
13
13

K. HARI KRISHNA

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RESPONSIBILITY ACCOUNTING
1. The operating performance of the three divisions of a Standard Mart for the year
2006-07 is as under.
Details

Division
AX (Rs.)
BY (Rs.)
CZ (Rs.)
Sales
50 00 000
2 40 00 000
2 60 00 000
Operating profit
3 00 000
6 00 000
13 00 000
Investment
25 00 000
80 00 000
1 00 00 000
(i) Using the operating margin percentage as the crieterion, which is the most
profitable division?
(ii) Using the rate of return on investment as the criterion, which is the most
profitable division?
(iii)Which of the two measures do you think gives the better indication of overall
performance?
2. Varsha limited is divided in to three segments X,Y and Z. all the divisions were
formed in the same year. Top management desires to determine which of the
divisions is most profitable. The following data have been furnished for your
analysis.
Details

Division

X (Rs.)
Y (Rs.)
Z (Rs.)
Net income before tax
1 00 000
1 11 000
1 60 000
Investment
2 50 000
3 00 000
5 00 000
Prepare ranking of the three divisions using ROI with a capital charge of 14 per
cent that the manager might use to assert that his is the most profitable division.
3. A company is considering an outlay on new investment projects for its two
divisions X and Y. the details about new investment projects are given below.
Particulars

Divisions
(Amount in 000 Rs.)
X
Y
Investment outlay (Rs.)
75 000
75 000
Expected return on new projects (Rs.)
14 000
10 000
Current ROI
16 %
18 %
The companys cost of capital is 12%. You are required to give your opinion to
the company regarding the investments in the above divisions.
4. ABC ltd operates a number of divisions located in different regions. Division A
incurred losses in the first half of the current year. Relevant revenue and cost data
pertaining to this division are as follows:
Sales revenue

Rs.

6 50 000

K. HARI KRISHNA

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Controllable variable costs


3 50 000
Controllable fixed costs
2 00 000
Attributable segment costs
50 000
Common firm-wide costs allocated to division A
60 000
Loss
(10 000)
You are required (i) to prepare a performance evaluation report of division A in
the proper format and (ii) advise the management whether its operations should be
continued or shut down.
5. The current years operating results of the three divisions A,B and C of
Hypothetical Ltd. are given below.
Divisions
A
B
C
Sales revenue
400
400
2000
Less expenses
360
200
1800
Segment profit contribution
40
200
200
Segment assets
200
800
4000
Determine the rate of return for the three divisions and rank these divisions
assuming that the firm follows investment centre basis of performance evaluation.
6. The Hypothetical Ltd has the following total operating results for the current
year.
Sales revenue
Rs.
56 00 000
Less variable costs
37 20 000
Contribution
18 80 000
Less fixed costs
10 00 000
Net income
8 80 000
The following additional information concerning the performance of each of the
firms three operating departments has been provided.
Departments
A
B
C
Sales revenue
Rs.
24 00 000
20 00 000
12 00 000
Variable costs
16 80 000
12 00 000
8 40 000
Direct fixed costs
3 20 000
2 80 000
2 00 000
1. Rank the three departments on the basis of their proportionate measure of
relative profitability.
2. A proposal to increase advertising expenses by Rs. 1 23 200 is expected to
guarantee a 10 per cent increase in all three departments. Analyze the effect of
this proposal on the firm as a whole and on each department. Assume that the
cost of advertising will be allocated to divisions according to each divisions
percentage to sales, and is to be considered as an attributable fixed cost of
each department.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

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ACTIVITY BASED COSTING


1. Spark ltd. manufactures two products viz., P and Q. the total overheads of
the plant are Rs. 25 000 and is allocated on the basis of direct labor hours.
Other information is given below.
Labor hours per unit
quantity
Product P
2
400
Product Q
4
1000
The firm now wants to change the overhead absorption system to ABC
system. The following activities and related cost drivers have been
identified.
Activity
Amount
cost driver
Material Handling
10 000
number of parts
Machine set up costs
4 500
number of shifts
Quality control basic amenities4 000
labor hours
The activity data for products P and Q are given below.
Products
units number of shifts
number of parts number
of inspection
Per unit
P
400
2
4
5
Q
1000
4
8
7
6
12
Calculate cost per unit under traditional costing system and the ABC system.
2. Magaz works ltd. has a production department in which two products, P1
and P2 are produced. The total overhead cost of the department is Rs. 15
500 and is allocated on the basis of direct labor hours. Other information is
given below.
Quantity
labor hour per unit total labor hours
Product P1
100 units
1 hour
100
Product P2
1000 units
3 hours
3 000
The firm now wants to change the overhead absorption system by
adopting the ABC system for which the different activities of the
department have been classified as follows
Activity
Amount
cost driver
Material handling
4 200
number of parts
Setup costs
4 900
number of production run
Other activities
3 100
labor hours
Quality control
3 300
number of inspections
The activity data for products P1 and P2 are given below.
Product
units number of
number of parts number of
Product run per unit
inspection
P1
100
2
4
4
P2
1000
5
8
7
7
11

K. HARI KRISHNA

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Calculate the cost per unit under the traditional costing system and the ABC
system.
3. Zenith super market has decided to increase the size of its store. It wants
information about the profitability of individual product lines. Soft drinks,
fresh produce and package food. Zenith super market provides the
following data for 2006 for each product line:
Soft drink
fresh produce
packaged food
Revenues
Rs. 3 17 000 8 40 240
4 83 960
Cost of goods sold2 40 000
6 00 000
3 60 000
Cost of bottles returned4 800
0
0
Number of purchase orders
Placed
144
336
144
Number of deliveries received120 876
264
Hours of shelf stocking time 216
2160
1080
Items sold
50 400
4 41 600
1 22 400
Zenith also provides the following information:
Activity
description of activity
total cost base
cost allocation
(1)
(2)
(3)
(4)
1. Bottle return
returning of empty Rs. 4 800
Direct tracing
To stores
to soft drink line
2. Ordering
placing of orders for
Purchases
62 400 624 purchase orders
3. Delivery
physical delivery and
Receipt of merchandise1 00 800
1260
deliveries
4. Shelf stocking
stocking of merchandise
on store Shelves and
ongoing restocking
69 120
3456
hours of shelf
stocking time
5. Customer support assistance provided to
Customers including
Checkout and bagging 1 22 880
6 14 400 items
sold
You are required to calculate operating income and operating income as a
percentage of revenues for each product line if Zenith allocates store
support costs (all costs other than cost of goods sold) to product lines
using ABC system.
4. Family store wants information about the profitability of individual
product lines: soft drinks, fresh produce and packaged food. The store
provides the following data for the current year for each product line.

K. HARI KRISHNA

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Soft drink fresh produce packaged food


Rs. 7 93 500 21 00 600
12 09 000
6 00 000
15 00 000
9 00 000
12 0000
0
0

Revenues
Cost of goods sold
Cost of bottles returned
Number of purchase orders
Placed
360
840
360
Number of deliveries received300
2190
660
Hours of shelf stocking time 540
5400
2700
Items sold
1 26 000
11 04 000
3 06 000
Family store also provides the following information for the current year:
Activity
DescriptionofactivityTotalcostbase Costallocation
Bottle return
returning of empty Rs. 12 000
Direct tracing
bottles
of soft drink line
Ordering

Delivery

Shelf stocking

Customer support

placing of orders for


Purchases
1 56 000
purchase orders

560

physical delivery and


Receipt of merchandise 2 52 000
deliveries

150

stocking of merchandise
on store Shelves and
ongoing restocking

assistance provided to
Customers including
Checkout and bagging

1 72 800
8640
hours of shelf
stocking time

3 07 200

1536000 items
sold

You are required to calculate operating income and operating income as a


percentage of revenues for each product line if Family Store allocates
store support costs (all costs other than cost of goods sold) to product lines
using an activity-based costing system.
5. The Aeronautical Ltd. has production facility specializing in jobs for the
aircraft components market. The traditional costing system has two direct
cost categories, namely, direct materials and direct manufacturing labour
and a single direct cost pool, that is, manufacturing overhead allocated on
the basis of direct labour hours. The indirect cost allocation rate would
have been Rs. 115 direct manufacturing labor-hour.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

The company has now decided to replace the single indirect cost pool with
five indirect cost pools, representing five activity areas each with its own
supervising and budget responsibility. The relevant data are as follows:
Activity area
cost driver used as an
cost
allocation rate
Allocation base
Material handling
parts
Rs 0.40
Lathe work
Turns
0.20
Milling
Machine-hours
20.00
Grinding
Parts
0.80
Testing
Units tested
15.00
Two representative jobs processed under the new system of the
facility at the most recent period had the following features.
Particulars
Job 101
Job 102
Direct material costs per job
Rs. 9 700
Rs. 59 900
Direct manufacturing labor cost per job
750
11 200
Direct manufacturing labor-hours per job
25
375
Parts per job
500
2 000
Turns per job
20 000
60 000
Machine-hours per job
150
1050
Units per job
10
200
Required:
(a) Compute the per unit manufacturing costs of each job under the
traditional job-cutting system.
(b) Compute the per unit manufacturing costs of each job under the
activity-based costing system.
6. A company manufacturing two products furnishes the following data for a
year:
Product

Annual output
(units)

Total Machine Total number of


hours
purchase orders

Total number
of set-ups

A
5 000
20 000
160
20
B
60 000
1 20 000
384
44
The annual overheads are as under:
Volume-related activity costs
Rs 5 50 000
Setup-related costs
8 20 000
Purchase-related costs
6 18 000
You are required to calculate the cost per unit of each product A and B
based on:
(i)
Traditional method of charging overheads
(ii)
Activity based costing method.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

UNIT I
1. What is the scope and strategic importance of management accounting?
2. Discuss in detail nature and characteristics of Management Control System.
3. What Cost Volume Profit (CVP) analysis? What are the managerial applications of
CVP analysis?
One compulsory problem on CVP analysis
UNIT II
1. Explain the concept and purpose of standard costing. What are the different types of
standards?
2. What are the different types of budgets? Explain the components of comprehensive
budgetary program
One compulsory problem on Budgeting or Standard Costing.
UNIT III
1. Explain the different types of Responsibility Centers? What is the need for
divisionalisation?
2. What is Transfer Pricing? Bring out the importance and various types of Transfer
Pricing
One problem may be asked on Transfer Pricing or
Responsibility Centers.
UNIT IV
1. Bring out the importance of Activity Based Costing. What is the difference between
Activity Based Costing and Traditional Costing?
2. Discuss the meaning and need for Customer Account Profitability (CAP) analysis.
How are customer costs managed in Service companies?
One problem on Activity Based Costing can be asked.

K. HARI KRISHNA

MBA TUITIONS, FINANCE LIVE PROJECTS

MBA,MCOM, M.Phil,(PhD),(ICWAI)

NCFM, AMFI CERTIFIACATIONS, JOB ORIENTED TRAINING


IN FINANCE ACCOUNTS WITH 100% PLACEMENT ASSISTANCE

DIRECTOR - 91 77 567 568

UNIT V
1. What is Product Life Cycle Costing? Discuss the pricing and evaluation criteria for
products at different stages of Product Life Cycle.
2. What is Target Costing? How Target Costing helps in pricing decisions.
SHORT 2 MARK
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Management Control
Management Accounting
Margin of Safety (MOS)
Break Even Point (BEP)
Make or buy decisions
Zero based budgeting
Flexible vs. operational budgeting
Material vs. Labor variance
Variance analysis Vs Standard setting
Cost centre vs. profit centre
Responsibility Accounting
Performance reports
Segmented performance evaluation
Behavioral aspects
Activity Based Management
Cost Drivers
PLC Assessment vs. Cost Assessment
Competitor Accounting
Competitive Pricing
Bidding