Q1(a)Cost-Volume-Profit Analysis
5 marks medium
ABC Limited started in the year 2013 with a total capacity of 2,00,000 units. Following information for its operating data is given: Year 2013: Sales (units) 80,000; Total Cost ₹34,40,000. Year 2014: Sales (units) 1,20,000; Total Cost ₹45,60,000. There has been no change in the cost structure and selling price and it is anticipated that it will remain unchanged in the year 2015 also. Selling price is ₹40 per unit.
Q1(b)Budgeting and Production Planning
5 marks medium
XYZ Limited is drawing a production plan for its two products - Product 'xml' and Product 'yml' for the year 2015-16. The company's policy is to maintain closing stock of finished goods at 25% of the anticipated volume of sales of the succeeding month. Budgeted Production: xml 2,00,000 units, yml 1,50,000 units. Direct Material: xml ₹220, yml ₹280 per unit. Direct Labour: xml ₹130, yml ₹120 per unit. Direct Manufacturing Expenses: xml ₹4,00,000, yml ₹5,00,000. Estimated units to be sold in the first four months of 2015-16: April (xml 8,000, yml 6,000), May (xml 10,000, yml 8,000), June (xml 12,000, yml 9,000), July (xml 16,000, yml 14,000).
Q1(c)Credit Policy and Working Capital Management
5 marks medium
A new customer has approached a firm to establish new business connection. The customer requires 1.5 month of credit. If the proposal is accepted, the sales of the firm will go up by ₹2,40,000 per annum. The new customer is being considered as a member of 10% risk of non-payment group. The cost of sales amounts to 80% of sales. The tax rate is 30% and the desired rate of return is 40% (after tax). Should the firm accept the offer? Give your opinion on the basis of calculations.
Q1(d)Leverage Analysis
5 marks medium
Following information are related to four firms of the same industry: Firm P: Change in Revenue 27%, Change in Operating Income 30%, Change in Earning per Share 21%. Firm Q: Change in Revenue 25%, Change in Operating Income 21%, Change in Earning per Share 23%. Firm R: Change in Revenue 23%, Change in Operating Income 36%, Change in Earning per Share 23%. Firm S: Change in Revenue 21%, Change in Operating Income 40%, Change in Earning per Share 23%.
Q2(a)Overhead Variances
0 marks easy
QS Limited has furnished the following information: Standard overhead absorption rate per unit ₹20; Standard rate per hour ₹4; Budgeted production 12,000 units; Actual production 15,560 units; Actual working hours 7,100; Actual overheads amounted to ₹2,95,000, out of which ₹62,500 fixed. Overheads are based on the following flexible budget: At 8,000 units Total Overheads ₹1,80,000; At 10,000 units Total Overheads ₹2,10,000; At 14,000 units Total Overheads ₹2,70,000.
Q2(b)Financial Analysis and Balance Sheet Preparation
0 marks easy
SSR Ltd. has furnished the following ratios and information relating to the year ended 31st March, 2015: Sales ₹60 Lacs; Return on Net worth 25%; Rate of Income tax 50%; Share Capital to Reserves 7:3; Current Ratio 2:1; Net-Profit to Sales (after tax) 6.25%; Inventory Turnover 12 (Based on cost of goods sold and closing stock); Cost of goods sold ₹18 Lacs; Interest on Debentures (@ 15%) ₹60,000; Sundry Debtors ₹2 Lacs; Sundry Creditors ₹2 Lacs.
Q3(a)Cost Analysis and Pricing
0 marks easy
A mini-bus, having a capacity of 32 passengers, operates between places 'A' and 'B'. The distance between the places is 30 km. The bus makes 10 round trips in a day for 25 days in a month. On an average the occupancy ratio is 70% and is expected throughout the year. Expenses: Insurance ₹15,600 per annum; Garage Rent ₹2,200 per quarter; Road Tax ₹5,000 per annum; Repair ₹4,800 per quarter; Salary of operating staff ₹7,200 per month; Tyres and Tubes ₹3,600 per quarter; Diesel: one litre is consumed for every 5 km at ₹22 per litre; Oil and sundries ₹80 per 100 km run; Depreciation ₹68,000 per annum. Passenger tax @ 22% on total taking is to be levied and bus operator requires a profit of 25% on total taking.
Q3(b)Capital Budgeting and Investment Appraisal
0 marks easy
Given below are the data on a capital project 'M': Annual cash inflows ₹60,000; Useful life 4 years; Internal rate of return 15%; Profitability index 1.06; Salvage value 0.
Q4(a)Joint Product Costing
0 marks easy
A company manufactures one main product (M1) and two by-products B1 and B2. For the month of January 2015, following details are available: Total cost upto separation point ₹2,12,400. M1: Cost after separation ₹35,000, Units produced 4,000, Selling Price per unit ₹100, Estimated net profit 20% of Sales Value, Estimated selling expenses 20% of Sales Value. B1: Cost after separation ₹24,000, Units produced 1,800, Estimated net profit 30% of Sales Value, Estimated selling expenses 15% of Sales Value. B2: Units produced 3,000, Selling Price per unit ₹40, Estimated net profit 30% of Sales Value, Estimated selling expenses 15% of Sales Value.
Q4(b)Cost of Capital and Financing Decisions
0 marks easy
A Ltd. wishes to raise additional finance of ₹30 lakhs for meeting investment plans. The company has ₹6,00,000 in the form of retained earnings available for investment purposes. Debt equity ratio - 30:70; Cost of debt - 11% (before tax) upto ₹3,00,000 and 14% (before tax) beyond that; Earnings Per share - ₹15; Dividend payout - 70% of earnings; Expected growth rate in dividend - 10%; Current market price per share - ₹90; Company's tax rate is 30% and shareholder's personal tax rate is 20%.
Q5(a)Cost Concepts
4 marks medium
Explain 'Sunk Cost' and 'Opportunity Cost'.
Q5(b)Contract and Pricing Terms
4 marks medium
Write notes on 'Escalation Clause'.
Q5(c)Financing Arrangements
4 marks medium
Explain 'Sales and Lease Back'.
Q5(d)Cash Management Models
4 marks medium
Explain 'Miller-Orr Cash Management model'.
Q6(a)Machine Hour Rate Calculation
0 marks easy
A machine shop cost centre contains three machines of equal capacities. Three operators are employed on each machine, payable ₹20 per hour each. The factory works for 48 hours a week which includes 4 hours set up time. The work is jointly done by operators. The operators are paid fully for the 48 hours. In addition, they are also paid a bonus of 10% of productive time. Costs are reported for this company on the basis of thirteen, four-weekly periods. Factory overheads applicable to the cost centre: Original Cost of each machine ₹52,000; Depreciation on original cost 10% per annum; Maintenance & Repair ₹60 per week per machine; Consumable Stores ₹75 per week per machine; Power 20 units per hour per machine at ₹0.80 per unit; Apportionment to cost centre: Rent ₹5,400 per annum; Heat and Light ₹9,120 per annum; Foreman's Salary ₹12,960 per annum.
Q6(b)Working Capital Management
0 marks easy
The following information is provided by the DVP Ltd. for the year ending 31st March, 2015: Raw Material storage period 50 days; Work in progress conversion period 18 days; Finished Goods storage period 22 days; Debt Collection period 45 days; Creditors' payment period 55 days; Annual Operating Cost ₹21 Lacs (Including depreciation of ₹2,10,000). (1 year = 360 days).
Q7(a)Cost Centre Definition and Classification
4 marks medium
Define 'Cost Centre' and state its types.
Q7(b)Integrated Accounting System
4 marks medium
State benefits of Integrated Accounting.
Q7(c)Working Capital Financing Methods
4 marks medium
Differentiate between 'Factoring' and 'Bill discounting'.
Q7(d)Financial Management Objectives
4 marks medium
Discuss the conflicts in Profit versus Wealth maximization principle of the firm.
Q7(e)Time Value of Money Concepts
4 marks medium
Define 'Present Value' and 'Perpetuity'.