Description
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Cost & Management Accounting
1. Kabir Khanna is the MD of Al Farid Supermarkets and has hired you as a Management accountant to reduce costs for his business.
Post your review of the overall business costs, you prepared the Cost sheet for Kabir and his Management Team.
Please assist them in understanding the classification of cost basis behavior briefly (Fixed, Variable, Semi-variable and Stepped costs) and advise the treatment of the following items in the Cost Sheet:
• Value of Scrap
• Bad Debts
• Trade Discount
• Packing charges
• Interest on Capital
(10 Marks)
2. Modern Biscuit co has more than 8 items in their product suite. Many a times, there is an issue faced in appropriately allocating Fixed costs to all the biscuit variants. As a consequence, the company finds it difficult to assess the correct cost of each product.
They hire Progressive partners as their Management consultants and are advised to introduce Standard costing in their company.
As a team member of Progressive partners, please advise Modern Pharma the benefits of Standard Costing (any 5) and 3 primary differences between Standard Costing and Budgetary control. (10 Marks)
3.a. Roy & Saha Ltd. has made a contract with Sharma Ltd. to supply 4,800 microwaves per annum.
It is estimated that the carrying cost per microwave per annum will be Rs. 12/- and that the set-up cost per batch is Rs. 648. Find out:
(a) Economic Batch Quantity.
(b) The time interval between two consecutive optimum runs
(c) The minimum inventory holding cost. (5 Marks)
3.b. Exotica Exports Ltd. has three divisions each of which makes a different product. The budgeted data for the next year is as follows: Divisions A B C Rs. Rs. Rs. Sales 1,12, 000 56, 000 84, 000 Direct material 14, 000 7, 000 14, 000 Direct labor 5, 600 7, 000 22, 400 Variable overhead 14, 000 7, 000 28, 000 Fixed cost 28, 000 14, 000 28, 000 Total cost 61, 600 35, 000 92, 400 The management is considering closing down division C. There is no possibility of reducing variable costs. Advice whether or not division C should be closed down.
Particulars Product A Product B Product C
Sales 1,12,000 56000 84000
Direct Material 14,000 7000 14000
Direct Labour 5,600 7000 22400
Variable Overheads 14,000 7000 28000
Fixed Cost 28,000 14000 28000
Total Cost 61,600 35000 92400
The Management is considering closing down Division C. There is no possibility of reduction in Variable costs in any division as they are at optimum capacity. Advise whether or not Division C should be shut down. (5 Marks)
For Nmims answersheets contact
[email protected]
+91 95030-94040
doc_856755446.docx
For Nmims answersheets contact
[email protected]
+91 95030-94040
Cost & Management Accounting
1. Kabir Khanna is the MD of Al Farid Supermarkets and has hired you as a Management accountant to reduce costs for his business.
Post your review of the overall business costs, you prepared the Cost sheet for Kabir and his Management Team.
Please assist them in understanding the classification of cost basis behavior briefly (Fixed, Variable, Semi-variable and Stepped costs) and advise the treatment of the following items in the Cost Sheet:
• Value of Scrap
• Bad Debts
• Trade Discount
• Packing charges
• Interest on Capital
(10 Marks)
2. Modern Biscuit co has more than 8 items in their product suite. Many a times, there is an issue faced in appropriately allocating Fixed costs to all the biscuit variants. As a consequence, the company finds it difficult to assess the correct cost of each product.
They hire Progressive partners as their Management consultants and are advised to introduce Standard costing in their company.
As a team member of Progressive partners, please advise Modern Pharma the benefits of Standard Costing (any 5) and 3 primary differences between Standard Costing and Budgetary control. (10 Marks)
3.a. Roy & Saha Ltd. has made a contract with Sharma Ltd. to supply 4,800 microwaves per annum.
It is estimated that the carrying cost per microwave per annum will be Rs. 12/- and that the set-up cost per batch is Rs. 648. Find out:
(a) Economic Batch Quantity.
(b) The time interval between two consecutive optimum runs
(c) The minimum inventory holding cost. (5 Marks)
3.b. Exotica Exports Ltd. has three divisions each of which makes a different product. The budgeted data for the next year is as follows: Divisions A B C Rs. Rs. Rs. Sales 1,12, 000 56, 000 84, 000 Direct material 14, 000 7, 000 14, 000 Direct labor 5, 600 7, 000 22, 400 Variable overhead 14, 000 7, 000 28, 000 Fixed cost 28, 000 14, 000 28, 000 Total cost 61, 600 35, 000 92, 400 The management is considering closing down division C. There is no possibility of reducing variable costs. Advice whether or not division C should be closed down.
Particulars Product A Product B Product C
Sales 1,12,000 56000 84000
Direct Material 14,000 7000 14000
Direct Labour 5,600 7000 22400
Variable Overheads 14,000 7000 28000
Fixed Cost 28,000 14000 28000
Total Cost 61,600 35000 92400
The Management is considering closing down Division C. There is no possibility of reduction in Variable costs in any division as they are at optimum capacity. Advise whether or not Division C should be shut down. (5 Marks)
For Nmims answersheets contact
[email protected]
+91 95030-94040
doc_856755446.docx