ASSIGNMENT ANSWER SHEET

NAME: <R. ARAVINDH KUMAR>

SUBJECT: <ACCOUNTING AND FINANCE>
ASSIGNMENT II
Undertaking:

I affirm that I have not given or received any unauthorized help on this assignment, and that this
work is my own. I understand that any violation of this will result in disciplinary action from the JAIN
Online program.

Answers

1.

The datas given are:

The selling price for each unit = Rs.20

Material cost = Rs .5

Labour cost = Rs.4

Sales = 80,000 units.

Fixed overheads =Rs.3,60,000.

Solution part:

Total sales =Rs. 16,00,000

Total direct material cost =Rs.4,00,000

Variable overhead =Rs.2,40,000

Total direct labour cost =Rs.3,20,000

Contribution =Sales – Variable cost

= Rs.6,40,000

P/V RATIO = contribution /sales

= 0.4

b) Bep in units and value :

contribution = contribution/Total unit

= 6,40,000 /80,000 = 8

Break even points (in units)= Fixed cost / contribution

= 3,60,000 /8

= 45,000 unit
Break even point in (Rs) = fixed cost/(p/v ratio)

= 3,60,000 /0.4

= 9,00,000

c) Margin of Safety :

=actual sales – break even sales

= 16,00,000 -9,00,000

=Rs. 7,00,000

d) profit when sales RS. 20,00,000

desired profit = (sales x p/v ratio) – fixed cost

= (20,00,000 x 0.4) -3,60,000

= Rs .4,40,000

2) answer for the second question:

a) Comparative statement analysis:

Rate of
31-03-2020 31-03-2021
Particulars Absolute change change (in %)
Revenue from
4,00,000 -1,00,000 (20)
operations 5,00,000
Other income 20,000 10,000 -10,000 (50)
Total income 5,20,000 4,10,000 -1,10,000 (21)
Cost of materials
-1,00,000 (33.3)
consumed 3,00,000 2,00,000
Employees
-20,000 (33.3)
benefit expenses 60,000 40,000
Finance cost 10,000 15,000 5,000 50
Depreciation 20,000 25,000 5,000 25
Other expenses 40,000 30,000 -10,000 (25)
Total Expenses 4,30,000 3,10,000 -1,20,000 (27.9)
Profit before tax 90,000 1,00,000 10,000 11.1
Tax rate 27,000 30,000 3000 11.1
Profit after tax 63,000 70,000 7000 11.1

Details:

1) The revenue of company is declined to 21 percent in 2021.

2) The expenses in 2021 is declined to 27.9 percent.
3) The profit raised high by 11.1 % in the year 2021
 2) b) common size financial statements:

Particulars 31-03-2020 % Of Sales 31-03-2021 % Of Sales

Revenue from operations 5,00,000 100 4,00,000 100
Other income 20,000 4 10,000 2.5
Total income 5,20,000 104% 4,10,000 102.5%
Cost of materials consumed 3,00,000 60 2,00,000 50
Employees benefit
expenses 60,000 12 40,000 10
Finance cost 10,000 2 15,000 3.75
Depreciation 20,000 4 25,000 6.25
Other expenses 40,000 8 30,000 7.5
Total expenses 4,30,000 86% 3,10,000 77.5%
Profit before tax 90,000 18% 1,00,000 25%
Tax rate 27000 5.4% 30,000 7.5%
Profit after tax 63000 12.6% 70,000 17.5%

Details:

1) The revenue of the company is 104% by the year of 2020

It is declined to 1.5% that is 102.5 % by next year itself.

2) The expenses also reduced to some extent 77.5% in 2021 earlier that was around 86%

3) Answer for the third question:

Ratio Analysis:-

It is very useful in financial analysis. By using ratio we get the conclusion on financial
statement.

There are different type of Ratio available:-

1) Solvency Ratio:-

 It is also called Leverage ratio.Used to assess that how company’s able to fulfil
its long term obligation.
It help in determining the long-term financial position of the firm.

2) Liquidity Ratio:-

 It means ability to pay its current liabilities in a timely manner with minimum
cost.
 Liquidity means assets which convert into cash easily and fast.
 These ratios enable us to assess the short-term debt-paying capacity of a firm.

3) Activity Ratio:-

 It is used to know about whether a company is using its resources

efficiently and effectively. To know how quick a company is able to
sell its product or how much times it takes to get the money from
there receivable.
 It indicated the speed at which any business are operating.
 These ratios are used to determine assets management by the firm
and indicate the speed with which resources are turned over to cash.

4) Profitability Ratio:-

 It is used assess a company’s ability to generate profits. It

represent the how company is performing in term of profit
because it a major factor of any business survival.

 To find a profitability ration we need to know about dimension and

objective of the firm:-
1) Earning Desired Profit on sales and operating value
2) Earning Desired Profit for share holders
Earning profit with efficiency

5) Valuation ratio:

 These ratios are also known as investor ratio or stock market ratio.

 If the firm's profitability, solvency, and turnover ratios are good

then the market test ratio will be high and a high share price is
expected
4. answer for the fourth question:
Present Value of an Annuity (PVA) = A ((1 + i)^n – 1) / (i (1 + i)^n)

= 2,10,000 ((1 + 0.12)^(6) – 1) / (0.12 (1 + 0.12)^(6))

= 2,10,000 (0.973) / (0.236)

= 2,10,000 * 4.122

= 8,65,620

Present value of ₹2,10,000 to be paid in six annual instalments with bank interest rate 12%

Conclusion: so we have to conclude that 8,65,620 is very much cheaper than 12,50,000 rs.