managment accounting

Dr. T.K. Jain. AFTERSCHOOOL M: 9414430763

You have received an order for 10 reams @ 1800 per reams. Ink and other material will cost you Rs. 5000. Other consumables are Rs. 3000. Your fixed costs are Rs. 500000. You are manufacturing Reams and many other products. Should you accept order?

You are getting Rs. 18000. Your variable costs are Rs. 8000. You hare able to save Rs. 10000 and your contribution per unit is 1000 Rupees per ream = it is positive. Definitely you must accept the order. Leave calculation of fixed costs for the time being – as you are already running many factories. (answer).

You have a customer who demands 6 months credit. You have 20% margins. Your customer has assured that they will buy in future also and their purchase will increase @ 20% per annum. Bank will charge 16% interest on Cash Credit facility & 15% on bill discounting. What will you do? (there is no possibility of bad debt).
 

Let us assume that you are selling goods costing Rs. 100 – at Rs. 120. Interest on Rs. 100 for 6 month is Rs. 8 and if you go for bill discounting, it will cost you Rs. 9. In any case you get benefit Rs.20 – Rs. 8 = Rs. 12 thus you must provide credit facility to customer. In the years to come sale will increase so you will get more beneifts in the years to come.

Annual sales rs. 24000, direct costs Rs. 4.6 overheads = 52800 selling commission = 15%. Targetted profit .102 per unit. What should be selling price?  Let us assume price to be X.  Total sales Rs. 24000X (qty* price per unit)  Total costs(Variable costs: 110400  Fixed cost = 52800  Selling expenses = 3600X  Profit = 24480 (1.02*24000)  Making an equation: (total sales = costs+profit)  24000X = 110400+3600X+52800+24480  20600X=187680  X =9.11 answer

You have to collect Rs. 100000 from your debtor after 6 month. You have to make settlement and get the money today. Bank’s interest rate is 12% p.a. How much money will take from your friend today in final settlement?
 =94339

now  As it is the present worth of this amount  Calculation is : 100000/1.06

Direct costs are Rs. 48. 10% output is defective and has to be sold at 10% off the normal price. Scrap realised you Rs. 9000. You have to earn 15% on sale price. What should be your normal price? (sale=1lakh units)
 Your

cost is 48*100000=4800000 – 9000  =4791000. 10000 units are defective.  Total sale prize realised is:  90000X + 10000 (.9X) = 100/85 (4791000)  99000X = 5636470  X = 56.94 Rs.

You have to give quotation for next 5 years. Your material costs will increase 20% p.a., labour costs will increase 5% p.a. overheads will increase at inflation rate. Selling expenses will remain same. Present costs are : (per unit): Material 20, labour 40, Overhead 2000000, selling expenses 20% of price. Annual output = 30000 units (will increase @ 10% p.a.). Inflation 10% p.a. Profit=5%on cost
 Present

cost: (1800000+2000000+.2*30000x)*1.5 =30000X  3800000*1.5 + .3*30000X = 30000X  21000X=3800000*1.5  X=271.42 answer.

Formulae of Barth Premium Plan?
 Hourly

rate * Square root of (Std. Hours * actual hours).

Flux method of labour turnover calculation?

(No. of separations+ no. of replacements) / average no. of workers



What is EOQ?
 Economic

order quantity

What is ordering cost?
 Cost

incurred per order – including transportation, shipping, stationery and other expenses.

Holding costs?
 These

are the costs that are incurred in retaining inventory – including interest to be paid to bank for credit availed, spoilage, wastage of goods, obsolescence etc.

At which point will you place order for purchase of goods?
 Reorder

level .

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Mention 3 methods of incentive payments to workers? Bedaux
Taylor Rowan Halsey Emerson, Diemer Group incentive plan, Baum incentive plan Accelerating premium system Barth Etc.

Mention 2 types of responsibility centres?
 Cost

centre  Profit centre  Investment centre  Expense centre

Mention 3 methods of depreciation calculation?
 Straight

line  Written down value method  Unit per hour method  Production unit method  Sinking fund method  Revaluation method  Renewal method

Mention 3 types of errors in accounting?
 Error

of commission  Error of omission  Error of principle  Compensating error  Error in balancing

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