Strategic Cost Management | NMIMS Assignment Help June 2023 Questions
1) The following information is available for a watch showroom. Calculate the following:
a) Contribution
b) PV Ratio
c) BE Ratio (in no. of units and value)
d) MOS at actual sales of Rs. 6,00,000/-
e) Number of watches to be sold to get a profit of Rs. 20,000/-
| Sale Price | Per unit (Rs.) | 9800 |
| Variable Costs | Per unit (Rs.) | 4905 |
| Commission (variable) | Per unit (Rs.) | 500 |
| Rent | Per month (Rs.) | 100000 |
| Salaries | Per Month (Rs.) | 120000 |
2) A Factory produces 3 types of shoes. While producing, for switching over from one type to another, there is a shift-over process involved. Costs incurred are as follows:
Shift-over costs Rs. 50,000
Factory Overheads Rs. 1,00,000/-
Packing costs Rs. 20,000/-
Engineering Costs Rs. 30,000/-
Supervisor Costs Rs. 10,000/-
Quantity produced A- 1000, B – 2000, C- 4000
Allocate the costs to the 3 shoes (A, B and C) using Traditional Costing method and Activity Based Costing. Some other information of the 3 products is as under:
| A | B | C | |
| No. of Switches | 3 | 4 | 2 |
| Machine Hours | 20 | 18 | 15 |
| No. of Receipts / packs | 4 | 5 | 8 |
| Engineering Hours | 30 | 40 | 50 |
| Supervisor Hours spent | 10 | 12 | 10 |
Compare the results and discuss.
3) a) Prepare a Cash Budget with following information.
| Diary | Notebook | Spiral Bound | |
| Sales Units | 8750 | 12500 | 5000 |
| Selling Price (per Unit) | 80 | 64 | 100 |
| Variable Cost ( per Unit) | 20 | 23 | 35 |
| Fixed Cost | 65000 | 140000 | 95000 |
| Allocation of General Overhead | 280000 | 320000 | 200000 |
b) A firm faces a decision about replacement of a machine.
Following is the information available:
1. Depreciation of existing machine is Rs. 25000/- p.a.
2. A new machine is available at Rs. 45000/- that is much more efficient in production.
3. Increase in power cost due to the new machine is Rs. 5000/- p.a.
4. Rent of the factory building is Rs. 60000/- p.a.
5. Scrap Value of the old machine is Rs. 4000/- Identify which of the above information is relevant and which is not relevant for taking the decision whether to continue with the existing machine or use new one.