BIRTHDAY CELEBRATION

Case

116-0040-1

Authorised for educator review use only by Sunil Kumar, ITM University, Gwalior. Expiry date 12-May-2017
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This case was written by Shahid Bhat (ITM University, Gwalior) and Sunil Kumar (ITM University, Gwalior). It is
intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective
handling of a management situation. The case was compiled from generalised experience.

© 2016, ITM University, Gwalior.

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 116-0040-1

BIRTHDAY CELEBRATION!!!

Sunil Kumar
(Assistant Professor, School of Business, ITM University Gwalior)
Sunilkumar.mba@itmuniversity.ac.in
&
Dr. Shahid Amin
(Assistant Professor, School of Business, ITM University Gwalior)
shahid.bhat@itmuniversity.ac.in

Rahul and Neeta Gupta got married some eight years ago in April 2008. They

Authorised for educator review use only by Sunil Kumar, ITM University, Gwalior. Expiry date 12-May-2017
belong to a middle class family and enjoy a happy married life. The partners are well
qualified with Rahul as M.Com, M. Phil degree holder and Neeta as a Doctorate in

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Philosphy. Mr. Gupta is also pursuing his Doctorate in Commerce. Mr. Gupta is working
as an Assistant Professor at one of the state private universities in India and Mrs. Gupta
serving as a teacher at one of the leading schools.
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Mrs. Gupta gave birth to a cute baby son on 30th August 2010. Lakshya, son has
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grown naughty and brought up with full attention and care. The smart child is very
popular and never misses any good activities in his school. He is sharp minded and
secures first rank in his class. Not only, the child is school famous but his smartness is
visible in his residential colony and packed with naughty activities. Lakshya, is very
favourite to his parents who has added more smiles to their life.

Mr. and Mrs. Gupta are very excited with their son, Lakshya, turning 06 year old
on 30th August 2016 and decided to throw a party to celebrate their son’s birthday. They
have decided to invite Lakshya’s twenty close friends from school. The family is also
likely to invite twelve close family friends. But the parents have varied opinions on how
and where the grand birthday party is to be celebrated. Neeta wishes the birthday to be
celebrated in a nearby banquet hall while Mr. Gupta prefers their own house to arrange a
party there.

Reshmi is proving her point that if the party is arranged at home, will be more
costly. Mrs. Gupta had developed a set of arguments that if they celebrate birthday at
home they additionally have to invite six kids and seven adults as guests from their
neighbourhood. Further in order to make all the house arrangements she will have to take
two days unpaid leave from her school (one day for cooking and one day for decoration
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arrangements). Mr. Gupta reminded his wife of the left over decoration material from last
year’s party costing around INR 2000.The decoration material could be well utilized if
they celebrated the birthday at their home.

You are required to help Mr. and Mrs. Gupta to solve this birthday celebration
issue through relevant costing method. The expenditures related information is shown in
Exhibit 1.

Exhibit 1.

Authorised for educator review use only by Sunil Kumar, ITM University, Gwalior. Expiry date 12-May-2017
S.No. Particular Amount
1 Rent for banquet (Included decoration of Rs.3000) 10,000

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2 Maid wage per day 500
3 Dinner per plate(included return gift of Rs.100 each) 400
4 Cake 2500
5 Material for dinner 8670
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6 Disposable Plates , Glass etc 1460

7 Invitation Card 900
8 Electricity 750
Travelling Expense for diner material (including Auto fair of
9 Rs.70 for purchasing of Cake and Rs.50 for decoration) 300
10 Gas Consumption 900

 Note: - Salary of Rahul is Rs 43000 and Neeta is Rs.32, 000 each (30 days per
month)