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 PricePer unit (Rs.)9800
Variable CostsPer unit (Rs.)4905
Commission (variable)Per unit (Rs.)500
RentPer month (Rs.)100000
SalariesPer 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:

No. of Switches342
Machine Hours201815
No. of Receipts / packs458
Engineering Hours304050
Supervisor Hours spent101210

Compare the results and discuss.

3) a) Prepare a Cash Budget with following information.

   Diary  NotebookSpiral Bound
Sales Units8750125005000
Selling Price (per Unit)8064100
Variable Cost ( per Unit)202335
Fixed Cost6500014000095000
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.