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Brief Answer Questions:
[10 * 1 = 10]Point out any two assumptions of cost volume profit analysis.
Define product cost.
What is cost plus pricing method of pricing?
Define opportunity cost.
List out the needed of capital investment decision.
Write about sales budget.
You are given following information:
| Output level (Units) | 25,000 | 50,000 |
| Supervision Cost (Rs.) | 12,000 | 22,000 |
Required: Variable cost per unit under high low method
Cost incurred per room is Rs 500. The hotel has practiced of profit charging 100 percent of cost.
Required: Calculate room rate per day
The following information provides by a manufacturing company
Selling price per unit Rs 40 and variable cost per unit Rs 24
Required: Profit volume ratio (P/V ratio)
The manufacturing company provides following position to you:
Production units: 80,000 units, Sales units: 79,000 units and opening stock 5,000 units
Required: Closing Stock Units
Short Answer Questions: (Attempt any SIX Questions)
[6 * 5 = 30]What are the differences between fixed and flexible budget?
What are the features and limitation of variable costing?
The mixed cost information of a hotel provided to you:
| Month | Output (Units) | Cost (Rs) |
| July | 100 | 200 |
| August | 200 | 300 |
| September | 300 | 400 |
| October | 400 | 500 |
Required: Segregate semi-variable cost fixed and variable cost by use of least square method.
The following information provides by a company:
| Normal Capacity | 10,000 units |
| Opening stock | 3,000 units |
| Production | 9,000 units |
| Sales | 11,000 units |
| Material Cost per unit | Rs 20 |
| Labor cost per unit | Rs 10 |
| Variable manufacturing overhead cost per unit | Rs 10 |
| Variable selling and distribution cost per unit | Rs 5 |
| Fixed manufacturing cost | Rs 50,000 |
| Administrative and selling fixed cost | Rs 50,000 |
| Selling price per unit | Rs 70 |
Required: Income statement under variable costing method
The following information provides by a hotel.
Variable cost per unit Rs 40 and selling price per unit Rs 80
Fixed cost Rs 120,000
Required:
a) Contribution margin ration (P/V ratio)
b) Cost Volume ratio
c) Break-even point
d) Required sales for desire profit Rs 40,000
e) Required sales to earn desired profits after tax Rs 60,000 if tax rate is 40%
The information provides by the company
| Output (Units) | 5,000 | 10,000 |
| Materials Rs | 20,000 | 40,000 |
| Labor (Rs) | 25,000 | 50,000 |
| Variable manufacturing cost (Rs) | 10,000 | 20,000 |
| Repair and improvement (Rs) | 20,000 | 30,000 |
| Inspections (Rs) | 10,000 | 15,000 |
| Office overhead | 30,000 | 30,000 |
Required: Flexible budget for 7,000 units and 9,000 units
Monthly income statement of a soft drink producer provides to you
The cost abstracts of a component of a company are as under
| Direct materials per unit | Rs 8 |
| Direct labor per unit | Rs 5 |
| Manufacturing overhead (Fixed cost Rs 5) | Rs 7 |
| Total cost | Rs 20 |
The buying cost of the component for the next year will be Rs 14 per unit.
Required: Should the company buy the company from outside supplier?
Comprehensive Answer Questions: (Attempt any TWO Questions)
[2 * 10 = 20]Defined cost accounting and explain objectives and importance of cost accounting.
The following transactions are provided to you
| Months | March | April | May | June |
| Sales (Rs) | 400,000 | 400,000 | 500,000 | 500,000 |
| Purchase (Rs) | 240,000 | 240,000 | 300,000 | 300,000 |
| Wages (Rs) | 40,000 | 40,000 | 50,000 | 60,000 |
| Office expenses (Rs) | 20,000 | 20,000 | 30,000 | 40,000 |
| Selling expenses (Rs) | 40,000 | 40,000 | 50,000 | 60,000 |
Additional information:
➤ 60 percent sales on cash and 40 percent collected in next month of sales
➤ 50 percent purchases are paid in the month of purchase and balance next month of purchase
➤ Wages, office and selling expenses are paid in the same month.
➤ Dividend Rs 60,000 paid in June
➤ Tax paid Rs 70,000 in May
➤ Sale of old machine at Rs 30,000 in April
➤ Opening cash balance Rs 30,000
Required: Cash budget for three-month April, May and June
Himalayan hotel is going to establish a new machine. The new machine should purchase at Rs 600,000 with useful life 5 years. The machine required installation and transportation cost Rs 100,000. The working capital required Rs 100,000. The machine will have book salvage value Rs 100,000 and cash salvage value Rs 80,000 at the end of five year.
➤ Production 6,000 units, selling price per unit Rs 200 cash expenses per unit Rs 165
➤ Tax rate 25 percent
➤ Required rate of return 10 percent
Required:
a) Net cash outlay
b) Deprecation
c) Annual cash flow after tax
d) Final year cash flow after tax
e) Net present value (NPV)
f) Should the hotel purchased new machine?