Q7 a.A manufacturer produces a car component. The cost sheet of the component is as follows: (5) Direct Material 4.00 Direct Labour 2.00 Variable Overheads 1.50 Fixed Overheads 2.50 A foreign manufacturer who uses this car component offers to purchase 20,000 units at Rs. 13 per component against the usual price of Rs. 15 per unit. If this offer is accepted the fixed expenses will go up by Rs. 40,000 annually. Would you accept this offer? Are there any other considerations, which may affect your decision? Q7 b.Calculate the effect on profit of a proposed change in ‘Sales Mix’ from the following data and also suggest that whether company should change the sales mix or continue with the existing: (5) M N O P Total Sales (in Rs) Existing Sales mix(Rs.) 80,000 1,00,000 40,000 20,000 2,40,000 Variable Cost (in Rs) 48,000 68,000 32,000 8,000 1,56,000 Fixed Cost (in Rs) 58,800 Proposed Sales Mix(Rs.)60,000 88,000 80,000 12,000 2,40,000 Q3.CASE STUDY: SANJAY INDUSTRIES LTD. (Balance Sheet and Income Statement) The followingare the balances of Ledger book of Sanjay Industries Ltd. as on 31st March 2006. Stock. 1st April 2005 6,75,000 Carriage Inward 8,550 Purchases 22,05,000 Profit & loss account (31st March 2005) 54,000 Sales 30,60,000 Salaries 67,500 Wages 2,70,000 Bills Receivables 45,000 Share capital (Authorized Capital 2,00,000 shares of Rs.10 each) 9,00,000 Sundry Expenses 63,450 Discount 27,000 Bills Payable 63,000 Purchases returns 90,000 Rent 36,000 Patents & trademark 43,200 Debtors 2,47,500 Creditors 1,57,500 Furniture & Fittings 1,53,000 Plant & Machinery 2,61,000 Cash at Bank 4,15,800 General Reserve 1,39,500 Further information- Outstanding rent amounted to Rs.7,200 while outstanding salaries are Rs. 8,100 at the end of the year. Make a provision for doubtful debts amounting to Rs. 4,590. Stock on 31st March 2006 was valued at Rs. 7,92,000. Depreciate plant & machinery @ 14% and furniture & fittings @18%. Amortize patents & trademarks @ 5%. Provide for managerial remuneration @ 10% of the net profit before such commission. Make a provision for income tax @ 35% on net profit. The board of directors proposes a dividend @ 10% for the year ended 31stMarch 2006 after transfer to General Reserve @ 5% of profit after tax. You are required to- (Show your workings clearly) Q A. Prepare following Financial Statements of Sanjay Industries Ltd. (8) Trading and Profit & Loss Account for the year ending 31 March 2006 Balance sheet as on 31st March 2006 Q B. Comment on the Profits of the company such as- (2) Gross Profit VS Net Profit Net Profit before tax VS Net Profit After Tax
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Q7 a.A manufacturer produces a car component. The cost sheet of the component is as follows: (5)
Direct Material 4.00
Direct Labour 2.00
Variable
Fixed Overheads 2.50
A foreign manufacturer who uses this car component offers to purchase 20,000 units at Rs. 13 per component against the usual price of Rs. 15 per unit. If this offer is accepted the fixed expenses will go up by Rs. 40,000 annually.
Would you accept this offer? Are there any other considerations, which may affect your decision?
Q7 b.Calculate the effect on profit of a proposed change in ‘Sales Mix’ from the following data and also suggest that whether company should change the sales mix or continue with the existing: (5)
M N O P Total Sales (in Rs)
Existing Sales mix(Rs.) 80,000 1,00,000 40,000 20,000 2,40,000
Variable Cost (in Rs) 48,000 68,000 32,000 8,000 1,56,000
Fixed Cost (in Rs) 58,800
Proposed Sales Mix(Rs.)60,000 88,000 80,000 12,000 2,40,000
Q3.CASE STUDY:
SANJAY INDUSTRIES LTD. (
The followingare the balances of Ledger book of Sanjay Industries Ltd. as on 31st March 2006.
|
Stock. 1st April 2005 |
6,75,000 |
Carriage Inward |
8,550 |
|
Purchases |
22,05,000 |
Profit & loss account (31st March 2005) |
54,000 |
|
Sales |
30,60,000 |
Salaries |
67,500 |
|
Wages |
2,70,000 |
Bills Receivables |
45,000 |
|
Share capital (Authorized Capital 2,00,000 shares of Rs.10 each) |
9,00,000 |
Sundry Expenses |
63,450 |
|
Discount |
27,000 |
Bills Payable |
63,000 |
|
Purchases returns |
90,000 |
Rent |
36,000 |
|
Patents & trademark |
43,200 |
Debtors |
2,47,500 |
|
Creditors |
1,57,500 |
Furniture & Fittings |
1,53,000 |
|
Plant & Machinery |
2,61,000 |
Cash at Bank |
4,15,800 |
|
General Reserve |
1,39,500 |
|
|
Further information-
- Outstanding rent amounted to Rs.7,200 while outstanding salaries are Rs. 8,100 at the end of the year.
- Make a provision for doubtful debts amounting to Rs. 4,590.
- Stock on 31st March 2006 was valued at Rs. 7,92,000.
Depreciate plant & machinery @ 14% and furniture & fittings @18%.- Amortize patents & trademarks @ 5%.
- Provide for managerial remuneration @ 10% of the net profit before such commission.
- Make a provision for income tax @ 35% on net profit.
- The board of directors proposes a dividend @ 10% for the year ended 31stMarch 2006 after transfer to General Reserve @ 5% of profit after tax.
You are required to- (Show your workings clearly)
Q A. Prepare following Financial Statements of Sanjay Industries Ltd. (8)
- Trading and Profit & Loss Account for the year ending 31 March 2006
- Balance sheet as on 31st March 2006
Q B. Comment on the Profits of the company such as- (2)
- Gross Profit VS Net Profit
- Net Profit before tax VS Net Profit After Tax
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