0 views

Uploaded by Vatsal Magajwala

Accounting Case Study

Accounting Case Study

© All Rights Reserved

- manipulating the simple interst formula
- Engineering economy
- Basic Concepts in the Development of Construction Plans
- FAQ-Tips and Tricks RRB
- Cost Banat
- Cf-module 1 Intro to Costing Copy (1)
- Process Costing
- 5.1-COST-SPREADSHEET-OF-IDEA-IN-TWO-STAGES.xlsx
- Standard Costing 2
- MCLR FINE TUNING.pdf
- COST ACCOUNTING.docx
- Case Studies on Relevant Costing
- Hospital Supply Case
- project report.docx
- Acounting
- Cost Concepts and Classifications
- CaseStudy1 Santos
- Homogeneous Tiles
- Accumulating and Assigning Cost to Product
- abc-140828055502-phpapp02

You are on page 1of 4

Introduction

This case is concerned with the topic Key factor. It is that factor which limits the volume of

output in the activities of an undertaking, at a particular point of time or over a period. The extent

of the influence must be assessed first so as to maximize the profits. Generally on the basis of

contribution, the decision regarding product mix is taken. It is not the maximizing of total

contribution that matter, but the contribution in terms of the key factor that is to be compared for

relative profitability. Thus it is the limiting factor or the governing factor or principal budget

factor.

Example: - If machine capacity is a limitation, contribution per machine hour is to be

considered for appropriate decision making. Thus profitability can be measured as:

Contribution

Key Factor

The case talks about the rural upliftment program where government has put under cultivation a

farm of 96 hectares to grow tomatoes of four varieties: Royal Red, Golden Yellow, Juicy

Crimson and Sunny Scarlet. In this case there are two limiting factor one is as per the market

requirement the four varieties of tomatoes must be produced with a minimum of 1000 boxes of

each variety. And second one is not more than 22750 boxes of any one variety should be

produced. Based on the limiting factor we have to measure the profitability of the program.

Solution

a.

Particulars Red Yellow Crimson Scarlet

Annual Yield(Boxes per hectare) 350 100 70 180

Variable Cost

Material per hectare 476 216 196 312

Growing per hectare 896 608 371 528

Harvesting & Packaging per hectare 1260 328 308 936

Transport per hectare 1820 520 280 1728

Total Variable Cost per hectare 4452 1672 1155 3504

Market price per hectare 5393 1587 1286 4008

Contribution per hectare 941 -85 131 504

Here transport cost and harvesting cost per hectare is found out by multiplying with the

Annual Yield because the value is given per box. Similar is the case with the market

price.

Analysis: - Here as per the findings of contribution, rank allocation is as follows:-

Rank 2 Sunny Scarlet

Rank 3 Juicy Crimson

Rank 4 Golden Yellow

Royal Red Golden Yellow Juicy Crimson Sunny Scarlet

62 10 18 6

Working Note:-

Within the given constraints i.e. minimum 1000 boxes must be produced, we have to first

allocate to Golden Yellow because it contributes to the minimum. Thereafter remaining three

varieties. So value of Golden Yellow come out to be as follows:-

Minimum boxes to be produced/ Annual Yield (Boxes per hectare) = 1000/100 =10

Now it is given in the case that out of total 96 hectares 68 hectares are allocated to all the four

varieties and remaining 28 is allocated to the Golden Yellow and Juicy Crimson. So remaining

value of Juicy Crimson out of 28 comes as 18. Similarly we calculate for the other two varieties.

But before allocating these values we have to crosscheck whether minimum 1000 boxes are

produced or not and accordingly we have to do our calculation.

Royal Red 931 62 57722

Golden Yellow -85 10 -850

Juicy Crimson 131 18 2358

Sunny Scarlet 504 6 3024

TOTAL 62254

Growing 11200

Harvesting 7400

General Administration 10200

Transport 7200

Total Fixed Cost 36000

Therefore Profit (in Rs) = Contribution – Fixed Cost

PROFIT 26254

c. Now with the improvement in program i.e. bank has provided a loan of Rs 25000 with a

nominal interest of Rs 1500 per annum to Golden Yellow and Juicy Crimson. Therefore

new fixed cost is

Growing 11200

Harvesting 7400

General Administration 10200

Transport 7200

Interest 1500

Total Fixed Cost 37500

With this improvement, it is also given that there will be a saving of Rs.1.25 per box in

the harvesting cost of Golden Yellow and the 28 hectares will become suitable for growing

Royal Red in addition to the existing Golden Yellow and Juicy Crimson varieties. So by

changing only one value of Golden Yellow we get the contribution as:-

Particulars Red Yellow Crimson Scarlet

Annual Yield(Boxes per hectare) 350 100 70 180

Growing per hectare 896 608 371 528

Harvesting & Packaging per

hectare 1260 203 308 936

Transport per hectare 1820 520 280 1728

Total Variable Cost per hectare 4452 1547 1155 3504

Market price per hectare 5393 1587 1286 4008

Contribution per hectare 941 40 131 504

In the above table there is only one change i.e. saving in the harvesting cost of Golden Yellow

which is calculated as 100*(3.28-1.25) = 203. Rest remains the same.

MINIMUM LAND ALLOCATION

Royal Golden Juicy Sunny

Red Yellow Crimson Scarlet

65 10 15 6

Above table calculation remains the same as done earlier.

Now on the basis of land allocation new contribution is:-

Royal Red 931 65 60515

Golden Yellow 40 10 400

Juicy Crimson 131 15 1965

Sunny Scarlet 504 6 3024

TOTAL 65904

Therefore maximum total profit that would be achieved when the improvement program is

carried out: -

Profit (in Rs) = Contribution – Fixed Cost

PROFIT 28404

Profit

29000

28000

27000

26000

25000

Before Improvement in After Improvement in

program program

Thus it is clearly seen from the graph that as profit is higher we must carry out the improvement

program.

- manipulating the simple interst formulaUploaded byapi-295241336
- Engineering economyUploaded byRanyEmadKauzmen
- Basic Concepts in the Development of Construction PlansUploaded byNiño Ediliz B. Garcia
- FAQ-Tips and Tricks RRBUploaded bychittaranjan169
- Cost BanatUploaded byLeah Machon
- Cf-module 1 Intro to Costing Copy (1)Uploaded byArjun Rajmohan
- Process CostingUploaded bySiri Ri
- 5.1-COST-SPREADSHEET-OF-IDEA-IN-TWO-STAGES.xlsxUploaded byHector Luis Chilo Chacca
- Standard Costing 2Uploaded byiishahbaz
- MCLR FINE TUNING.pdfUploaded bySandeepkumar Gara
- COST ACCOUNTING.docxUploaded byfelixmuyove
- Case Studies on Relevant CostingUploaded byZuny Doll
- Hospital Supply CaseUploaded byKevin Gao
- project report.docxUploaded bySameer Khan
- AcountingUploaded bymohammed nawwab
- Cost Concepts and ClassificationsUploaded byAdrianChrisArciagaArevalo
- CaseStudy1 SantosUploaded byAJ Sa
- Homogeneous TilesUploaded byMark Roger Huberit II
- Accumulating and Assigning Cost to ProductUploaded byAchmad Faizal
- abc-140828055502-phpapp02Uploaded byChidanshChoudhary
- 2018920185134Uploaded byGopal Gondhia
- Distribution cycleUploaded byChiranjib barik
- C8 Operation ManagementUploaded byamit1988deeg
- production planUploaded bySalvara Jane Daniel
- DocumentUploaded byCurrent Shirts
- Def in at IonUploaded byAsiful Islam
- Further_Integration_Techniques.PDFUploaded byAsmaa Wajeah
- Theory Question 1Uploaded byQuestionscastle Friend
- Standard Costing MdiUploaded byAbhineet Kumar
- Cost Terms, Concepts,ClassificationsUploaded byTehniat Zafar

- Business law AssignmentUploaded byVatsal Magajwala
- Assignment 1 TmUploaded byVatsal Magajwala
- Aasignment 1 AfmUploaded byVatsal Magajwala
- afm case 2Uploaded byVatsal Magajwala
- or case 8Uploaded byVatsal Magajwala
- Nik-stats Assignment No.3Uploaded byVatsal Magajwala
- Final Accunts 2Uploaded byVatsal Magajwala
- mktg assignmentUploaded byVatsal Magajwala
- Final Presentation (Coloured)Uploaded byVatsal Magajwala
- Economic NewsUploaded byVatsal Magajwala
- AssignmentUploaded byVatsal Magajwala
- FM Case 5Uploaded byVatsal Magajwala
- CHAPTER 4 Consumer BehaviourUploaded byVatsal Magajwala
- Case 9 Uniform UniformsUploaded byVatsal Magajwala
- Accounts AssignmentUploaded byVatsal Magajwala

- Ch. 20Uploaded bya_d_r_i_89
- FI CO Closing StepUploaded byPatris Sutrisno
- Grand JeansUploaded byRaja Rafsanjani Hidayat Chan
- Blueprint QuestionsUploaded byvmkakumanu
- IAS 2 InventoryUploaded byAakanksha Saxena
- Remodeling ContractUploaded byJohnny B HowRedford-ard
- The Economics of Safety, Health, And Well-Being at Work an OverviewUploaded byAhmet Öztemür
- Sc Chapter 08 Absorption Variable Costing Invty MgmntUploaded byDaniel John Cañares Legaspi
- Chap 002Uploaded byycp2013
- Chapter+01+Managerial+AccouUploaded byjji
- Beckstroms LawUploaded bykartik3
- Total Project CostUploaded byDenikaaaToledo
- INTRODUCTION TO PRODUCT COSTING.docUploaded bySteeeeeeeeph
- 3jayswacUploaded bySumbla Tayyab
- cost_overview.docUploaded byRajesh Mk
- ions for Contract TypesUploaded byadnanfakher
- Mock-AUploaded byZeng Binger
- Cost Analysis for PricingUploaded byShafiq UrRehman
- Spoilage and Rework ProbsUploaded byShey INFT
- Advanced Cost AccountingUploaded bySumit Rajpura
- Training CurriculumUploaded byMichelle Foss
- Cost Accounting Guideline 1, issued by ICMAPUploaded byPlatonic
- Milat TractorsUploaded byUzair Shah
- Sap Business One LessonsUploaded byVeera Mani
- Weacca.blogspot.com E Video Lesson by Seah ACCA F5 PerformanUploaded byIzhar Mumtaz
- Akuntansi Biaya - PPT Horngren (Teori).pdfUploaded byPandu Wiguna
- Chapter - 6- Mfr. ProcessUploaded byStorm Wind
- 11i Opm - Costing FlowUploaded byRamesh Poshala
- HP Blueprint.psUploaded byRangabashyam
- Indirect CostsUploaded byGaurav Mehra