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AEREN
FOUNDATION’S Maharashtra Govt. Reg. No.:
F-11724
SUBJECT:
ACCOUNTING
Total Marks: 80
N.B.: 1) All questions are compulsory
2) All questions carry equal
marks.
Q1) ABC Ltd. Produces room coolers. The company is considering whether it should
continue to manufacture air circulating fans itself or purchase them from
outside. Its annual requirement is 25000
units. An outsider vendor is prepared to
supply fans for Rs 285 each. In
addition, ABC Ltd will have to incur costs of Rs 1.50 per unit for freight and
Rs 10,000 per year for quality inspection, storing etc of the product.
In the most recent year ABC Ltd. Produced
25000 fans at the following total cost:
Material Rs. 50,00,000
Labour Rs. 20,00,000
Supervision & other indirect labour Rs.
2,00,000
Power and Light Rs.
50,000
Depreciation Rs.
20,000
Factory Rent Rs.
5,000
Supplies Rs.
75,000
Power and light includes Rs 20,000 for
general heating and lighting, which is an allocation based on the light
points. Indirect labour is attributed
mainly to the manufacturing of fans.
About 75% of it can be dispensed with along with direct labour if
manufacturing is discontinued. However,
the supervisor who receives annual salary of Rs 75,000 will have to be
retained. The machines used for
manufacturing fans which have a book value of Rs 3,00,000 can be sold for Rs
1,25,000 and the amount realized can be invested at 15% return. Factory rent is allocated on the basis of
area, and the company is not able to see an alternative use for the space which
would be released. Should ABC Ltd.
Manufacture the fans or buy them?
Ans:
Total
Purchasing cost of 25,000 Units Fans=
|
Purchasing
cost of 25,000 units Fans
|
25,000 Units
x Rs. 285
|
71,25,000
|
|
Freight
|
25,000 Units
x Rs. 1.50
|
37,500
|
|
Quality
inspection, storing etc charges
|
|
10,000
|
Q2) Usha Company produces three consumer products:
P, Q and R. The management of the company wants to determine the most
profitable mix. The cost accountant has
supplied the following data.
Usha Company: Sales and Cost Data
|
Description
|
Product
|
Total
|
||
|
|
P
|
Q
|
R
|
|
|
Material Cost per unit
|
|
|
|
|
|
Quantity (Kg)
|
1.0
|
1.2
|
1.4
|
|
|
Rate per Kg (Rs)
|
50
|
50
|
50
|
|
|
Cost per unit (Rs)
|
50
|
60
|
70
|
|
|
Labour Cost per unit
|
30
|
90
|
90
|
|
|
Variable Overheads per unit
|
15
|
10
|
25
|
|
|
Fixed Overheads (Rs .000)
|
|
|
|
9,175
|
|
Current Sales (Units ,000)
|
100
|
50
|
60
|
210
|
|
Projected Sales (Units ,000)
|
109
|
55
|
125
|
289
|
|
Selling Price per unit (Rs)
|
150
|
200
|
270
|
|
Raw material used by the firm is in short
supply and the firm can expect a maximum supply of 350 lakh kg for next
year. Is the company’s projected sales
mix most profitable or can it be changed for the better?
Ans:
|
Description
|
Product
|
Total
|
||
|
|
P
|
Q
|
R
|
|
|
Material Cost
|
350
|
420
|
490
|
1260
|
Q3) DSQ Company Ltd, a diversified company,
has three divisions, cement, fertilizers and textiles. The summary of the company’s profit is given below:
(Rs/Crore)
|
|
Cement
|
Fertilizer
|
Textiles
|
Total
|
|
Sales
|
20.0
|
12.0
|
18.0
|
50.0
|
|
Less : Variable Cost
|
8.0
|
9.6
|
5.4
|
23.0
|
|
Contribution
|
12.0
|
2.4
|
12.6
|
27.0
|
|
Less : Fixed Cost (allocated to divisions
in proportion to volumes of Sales)
|
8.0
|
4.8
|
7.2
|
20.0
|
|
Profit (Loss)
|
4.0
|
(2.4)
|
5.4
|
7.0
|
After allocating the company’s fixed
overheads to products the Fertilizers, division incurs a loss of Rs 2.4
crore. Should the company drop this
division?
Ans:
|
|
|
|
Rs./Crore
|
|
|
|
Cement
|
Fertilizer
|
Textiles
|
Total
|
|
Sales
|
20.00
|
12.00
|
18.00
|
50.00
|
|
Less : Variable Cost
|
8.00
|
9.60
|
5.40
|
23.00
|
Dear students get fully solved assignments
Send your semester & Specialization name to our
mail id :
help.mbaassignments@gmail.com
or
call us at : 08263069601
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