...operation basis. Management has to consider the best alternative situations so that the profit of the organisation will increase. Some of these are as follows 1. product sales pricing & mix 2. limiting factors 3. multiple scare resource problem ( Ref chapter 10a) 4. make or buy 5. selection of products, etc etc Introduction: Decision making are of 2 types. (1) Long term decision making : For this purpose we generally apply capital budgeting technique. (2) Short term decision making ( i.e. generally in one financial year) a) Pricing decision for the particulars period for which we apply different pricing techniques. b) Other than pricing decision such as- (i) Except or reject an offer (ii) Make or buy the product or slab component (iii) Sale or process (iv) Exploring new foreign market. (v) Discontinue of a product (vi) Shut down of a factory etc. In this way there may be different type of heading. However, the solution technique are limited to four only : (1) Problem of limiting factor or limiting factor approach ( for common process applicable for more than 1 product). 1) Differential cost & incremental Revenue analysis where the production & sales will continue till Marginal Revenue > Marginal costs. (3) Indifference cost approach ...
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...Profit Analysis Meaning Marginal Cost: The tenn Marginal Cost refers to the amount at any given volume of output by which the aggregate costs are charged if the volume of output is changed by one unit. Accordingly, it means that the added or additional cost of an extra unit of output. Marginal cost may also be defined as the "cost of producing one additional unit of product." Thus, the concept marginal cost indicates wherever there is a change in the volume of output, certainly there will be some change in the total cost. It is concerned with the changes in variable costs. Fixed cost is treated as a period cost and is transferred to Profit and Loss Account. Marginal Costing: Marginal Costing may be defined as "the ascertainment by differentiating between fixed cost and variable cost, of marginal cost and of the effect on profit of changes in volume or type of output." With marginal costing procedure costs are separated into fixed and variable cost. According to J. Batty, Marginal costing is "a technique of cost accounting pays special attention to the behaviour of costs with changes in the volume of output." This definition lays emphasis on the ascertainment of marginal costs and also the effect of changes in volume or type of output on the company's profit. FEATURES OF MARGINAL COSTING (1) All elements of costs are classified into fixed and variable costs. Marginal costing is a technique of cost control and decision making. Variable costs are charged as the cost of production...
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...Profit Analysis Meaning Marginal Cost: The tenn Marginal Cost refers to the amount at any given volume of output by which the aggregate costs are charged if the volume of output is changed by one unit. Accordingly, it means that the added or additional cost of an extra unit of output. Marginal cost may also be defined as the "cost of producing one additional unit of product." Thus, the concept marginal cost indicates wherever there is a change in the volume of output, certainly there will be some change in the total cost. It is concerned with the changes in variable costs. Fixed cost is treated as a period cost and is transferred to Profit and Loss Account. Marginal Costing: Marginal Costing may be defined as "the ascertainment by differentiating between fixed cost and variable cost, of marginal cost and of the effect on profit of changes in volume or type of output." With marginal costing procedure costs are separated into fixed and variable cost. According to J. Batty, Marginal costing is "a technique of cost accounting pays special attention to the behaviour of costs with changes in the volume of output." This definition lays emphasis on the ascertainment of marginal costs and also the effect of changes in volume or type of output on the company's profit. FEATURES OF MARGINAL COSTING (1) All elements of costs are classified into fixed and variable costs. Marginal costing is a technique of cost control and decision making. Variable costs are charged as the cost of production...
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...Large Cap | Crisil Rank | NAV (Rs./Unit) | 1 yr Return (%) | AUM (Rs. cr.) Jun 15 | | | Franklin India Oppor. (G) | Rank 1 | 59.24 | 33.0 | 380.49 | | | SBI Blue Chip Fund (G) | Rank 1 | 29.37 | 26.6 | 1,737.07 | | | Tata Equity Opp. Fund - Regular (G) | Rank 1 | 154.95 | 25.8 | 1,027.27 | | | Small & Mid Cap | Crisil Rank | NAV (Rs./Unit) | 1 yr Return (%) | AUM (Rs. cr.) Jun 15 | | | Can Robeco Emerg-Equities (G) | Rank 1 | 62.47 | 40.2 | 427.66 | | | Principal Emerging Bluechip(G) | Rank 1 | 71.42 | 40.2 | 468.60 | | | Tata Mid Cap Growth Fund (G) | Rank 1 | 106.22 | 40.3 | 446.83 | | | Diversified Equity | Crisil Rank | NAV (Rs./Unit) | 1 yr Return (%) | AUM (Rs. cr.) Jun 15 | | | Franklin High Growth Cos (G) | Rank 1 | 30.74 | 38.8 | 2,462.40 | | | ICICI Pru Exp&Other Services-RP (G) | Rank 1 | 46.91 | 37.8 | 550.36 | | | ICICI Pru Value Discovery Fund (G) | Rank 1 | 117.84 | 27.7 | 8,686.06 | | | Tata Ethical Fund (G) | Rank 1 | 132.97 | 27.5 | 280.59 | | | UTI MNC Fund (G) | Rank 1 | 157.14 | 48.8 | 1,030.10 | | | Thematic - Infrastructure | Crisil Rank | NAV (Rs./Unit) | 1 yr Return (%) | AUM (Rs. cr.) Jun 15 | | | Can Robeco Infrastructure (G) | Rank 1 | 39.53 | 26.4 | 106.38 | | | Franklin Build India Fund (G) | Rank 1 | 30.34 | 43.6 | 387.35 | | | ELSS | Crisil Rank | NAV (Rs./Unit) | 1 yr Return (%) | AUM (Rs. cr.) Jun 15 | | | Axis...
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...section is divided into 10 groups. Groups are formed on the basis of roll nos. like, 1-6, 7-12, 13-18 and so on till 55-60. The submissions are to be done as a group. * All students in each section are required to participate and solve the questions asked. One or two students in each group will be asked to come up and solve the problem on the board and he/she has to clarify doubts in class. Marks are assigned accordingly. * Answer all the questions below. * Assignment submission date: 7th Dec 2015. All are required to abide by the date and there will be no extension of time whatsoever the reasons may be. Questions 1. A manufacturing co uses 2 identical large and 4 identical small machines. Each large machine occupies a quarter of the workshop and employs 3 workers, each small machine occupies half the space of the large machine and employs 2 workers. The workers are paid by piece work. Each of the 6 machines is estimated to work 1440 hours pa. The effective working hours for life is 12000 hours for each large machine and 9000 hours for each small machine. Large machines cost 20 L each and small ones cost 4L each. Scrap values are 1L and 10000 respectively. Repairs and maintenance are estimated to cost 2L for each large machine and 12000 for each small machine during its effective life. Power consumption costs 5 per unit and amounts to 20 units per hour for large and 5 units for small machine. The manager is paid 5L a year and the workshop supervision takes...
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...Quantitative questions on Management Control Systems University Question Paper May 2011: 1. A company is working at 50% of its capacity. It sells 20000 units at a price of Rs. 100 per unit. Cost per unit is Rs. 90, the breakup of which is as follows: Material Rs. 40 Manufacturing Cost Rs. 30 ( 30% is fixed) Selling Cost Rs. 10 ( 40% is fixed) Administration Cost Rs. 10 ( 50 % is fixed) When the company works @ 80% capacity, selling price will fall by 5% and material cost will rise by 5%. At full capacity selling price will fall by 8% and material cost will rise by 8%. Calculate Profit & Loss at each level of working. Should the company work at its full capacity? Solution: Working of the company at different capacities is as under Particulars | Capacity Utilisation | | 50%=20000 units | 80%=32000 units | 100%=40000 units | Sales | 20,00,000 | 30,40,000 | 36,80,000 | Less Variable costs | | | | Materials Cost | 8,00,000 | (42 x 32000) = 13,44,000 | (43.20 x 40000) =17,28,000 | Manufacturing Cost | (21 x 20000) =4,20,000 | (21 x 32000)= 6,72,000 | (21 x 40000)= 8,40,000 | Selling Cost | (6 x 20000)= 1,20,000 | (6 x 32000)= 1,92,000 | (6x 40000)=2,40,000 | Admin. Expenses | (5 x 2000)= 1,00,000 | (5 x 32000)= 1,60,000 | (5 x 40000)=2,00,000 | Total Variable Cost | 14,40,000 | 23,68,000 | 30,08,000 | Fixed Cost : | | | | Manufacturing cost | (9 x 20000) =1,80,000 | 1,80,000 | 1,80,000...
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...Sheet of this Question paper, contact aravind.banakar@gmail.com www.mbacasestudyanswers.com ARAVIND – 09901366442 – 09902787224 Cost and Management Accounting 1. X is the manufacture of Mumbai purchased three chemicals A, B and C from U.P.The bill gave the following information: Chemical A: 6000 kgs @ Rs. 4.20 per kg Rs 25,200 Chemical B: 10000 kgs @ Rs. 3.80 per kg 38,000 Chemical C: 4000 kgs @ Rs. 4.75 per kg 19,000 VAT 2,055 Railway Freight 1,000 Total Cost 85,255 A shortage of 100 kgs in chemical A, of 140 Kgs in chemical B and Of 50 kgs in chemical C was noticed due to breakages. At Mumbai, the manufacture paid octroi duty @ 0.20 kg. He also paid hamali, Rs 20 for the chemical a, Rs 58.12 for chemical B and Rs 35.75 for chemical C. Calculate the stock rate that you would suggest for pricing issue of chemicals assuming a provision of 4 % towards further deterioration and also show the quantity (kgs) of chemicals available for issue. 2. ABC Ltd has collected the following data for its two activities. It calculates activity cost rates based on cost driver capacity. Activity Cost driver Capacity Cost Power Kilowatt hours 50000 hrs Kilowatt Rs 200000 Quality Inspection Numbers of inspection 10000 inspection Rs 300000 The Company makes three products, A, B and C.For the year ended March 31, 2004, the following consumption of cost drivers was reported: Product Kilowatt-hours...
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...TAX ON SHORT-TERM CAPITAL GAINS Introduction Gain arising on transfer of capital asset is charged to tax under the head “Capital Gains”. Income from capital gains is classified as “Short Term Capital Gains” and “Long Term Capital Gains”. In this part you can gain knowledge about the provisions relating to tax on Short Term Capital Gains. Meaning of Capital Gains Profits or gains arising from transfer of a capital asset are called “Capital Gains” and are charged to tax under the head “Capital Gains”. Meaning of Capital Asset Capital asset is defined to include: (a) Any kind of property held by an assesse, whether or not connected with business or profession of the assesse. (b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992. However, the following items are excluded from the definition of “capital asset”: i. any stock-in-trade (other than securities referred to in (b) above), consumable stores or raw materials held for the purposes of his business or profession ; ii. personal effects, that is, movable property (including wearing apparel and furniture) held for personal use by the taxpayer or any member of his family dependent on him, but excludes— (a) jewellery; (b) archaeological collections; (c) drawings; (d) paintings; (e) sculptures; or (f) any work of art. “Jewellery" includes— (a) ornaments made of gold, silver, platinum or any other precious metal or any...
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...2015. 1. S Co. entered into the following transactions: a. Paid suppliers b. Received dividend from an associate. c. Sold investments at a gain. d. Purchased copyrights with cash. e. Issued debentures in exchange for equipment. f. Paid interest on bank overdraft. g. Converted debentures into equity shares. h. Received payments from customers. i. Purchased investments with cash. j. Purchased a 60-day certificate of deposit with cash. k. Paid advance to a supplier of equipment. l. Sold a 90-day Treasury bill. m. Collected installment payments for the sale of an old plant. n. Earned a net profit. o. Sold machinery at a gain. p. Entered into a finance lease for a new machine. q. Sold a plant at carrying amount. r. Issued convertible debentures for cash. s. Paid festival bonus to employees. t. Collected insurance proceeds from a patent infringement suit. u. Paid installments for the purchase of inventories. Required: 1. Classify each as an operating activity, investing activity, financing activity, non-cash activity or none of the above. 2. Also state whether the transaction results in an increase in cash, a decrease in cash, or no effect on cash. 2. P Plastics Company’s statement of profit and loss for the year ended April 30, 20x3 and balance sheet as on April 30 20x2 and 20x3 are as follows: P Plastics CompanyStatement of Profit and LossFor the year ended April 30, 20x3 | Sales | Rs. 75,800...
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...In the books of a Company Cost Sheet for the period ended…….. Units Produced….. Name of the product unit sold…. | |Particulars |Total cost Rs. |Unit Cost Rs.| | |Opening stock raw materials | | | |Add |Purchases of Raw Materials | | | |Add: |Expenses on Purchases of Raw Materials (octroi & duty) | | | |Less: |Closing stock of raw materials | | | |Less: |Sale of scrap or defectives of raw materials | | | |= |Cost of materials consumed | | | |Add: |Productive Labour | | | |Add: |Outstanding wages | | | |Add: |Direct Expenses( architect’s fees) | | | |= |Prime...
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...SUBMITTED BY: PIYALI DASGUPTA Meaning of leverage In general ,leverage refers to accomplish certain things which are otherwise not possible i.e. lifting of heavy objects with the help of lever. This concept of leverage is valid in business also . In finance ,the term ‘leverage’ is used to describe the firm’s ability to use fixed cost assets or funds to increase the return to its owners; i.e. equity shareholders. In other words, the fixed cost funds i.e. debentures & preference share capital act as the fulcrum , which assist the lever i.e. the firm to lift i.e. to increase the earnings of its owner i.e. the equity shareholders. If earnings less the variable costs exceed the fixed costs i.e. preference dividend & interest on debenture, or earnings before interest and taxes exceed the fixed return requirement, the leverage is called favorable . when they do not ,the result is unfavorable leverage . Leverage is also the influence which an independent variable has over a dependent/related variable i.e. rainfall over production. In financial context, sales & fixed cost over profit. DIAGRAM Leverage in physics Leverage in finance LEVER LIFTING Increasing the earnings Fixed cost fund FULCRUM TYPES OF LEVERAGE OPERATING LEVERAGE The leverage associated with investment (asset acquisition) activities is referred as operating Leverage. Formula : operating leverage=contribution/operating profit Where , contribution=sales-variable...
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...LESSON 1 INTRODUCTION TO ACCOUNTING Contents 1.0 Aims and Objectives 1.1 Introduction 1.2 Book- Keeping 1.2.1 Meaning 1.2.2 Definition 1.2.3 Objectives 1.3 Accounting 1.3.1 Meaning 1.3.2 Definition 1.3.3 Objectives 1.3.4 Importance 1.3.5 Functions 1.3.6 Advantages 1.3.7 Limitations 1.4 Methods of Accounting 1.4.1 Single Entry 1.4.2 Double Entry 1.4.3 Steps involved in double entry system 1.4.4 Advantages of double entry system 1.5 Meaning of Debit and Credit 1.6 Types of Accounts and its rules 1.6.1 Personal Accounts 1.6.2 Real Accounts 1.6.3 Nominal Accounts 1.7 Distinction between Book Keeping and Accounting 1.8 Branches of Accounting 1.8.1 Financial Accounting 1.8.2 Cost Accounting 1.8.3 Management Accounting 1.9 Let us Sum Up 1.10 Lesson-End Activities 1.11 Check your Progress 1.12 Points for Discussion 1.13 References 1.0 AIMS AND OBJECTIVES i) ii) To know the Meaning ,Definition and objective of Book- Keeping To study the objectives, functions, importance and limitations of Accounting iii) To understand the methods of Accounting, kinds of Accounts and Accounting rules. This watermark does not appear in the registered version - http://www.clicktoconvert.com 1 iv) To study the difference between Book- keeping and Accounting v) To study the various branches of Accounting 1.1 INTRODUCTION In all activities (whether business activities or non-business activities) and in all organizations (whether business organizations like a manufacturing entity or trading...
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...CHAPTER 1: MANAGEMENT ACCOUNTING Introduction: Accounting may be broadly classified into two categories – accounting which is meant to serve all parties external to the operating responsibility of the firms and the accounting which is designed to serve internal parties who take care of the operational needs of the firm. The first category which is conventionally referred to as financial accounting, looks to the interest of those who have primarily a financial stake in the organization’s affairs – creditors, investors, employees etc. On the other hand the second category of accounting is primarily concerned with providing information relating to the conduct of the various aspects of a business like cost or profit associated with some portions of business operations to the internal parties viz., management. This category of accounting is called as Management accounting. In order to perform the primary task of decision making managers of business enterprises need information about the past, present and future in the functional areas of management such as personnel, finance, marketing and production. Right decision making has to be based on quantitative and qualitative information. The management thus constantly needs accounting information to base its decisions upon. Thus management accounting provides the information needed by management personnel. Definition: The Institute of Chartered Accountants of England has defined management accounting as: “Any form of accounting...
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...1.Prestige Builders has been offered a contract by Excel Ltd. to build Guest Houses for use by top management. The contract will be for a period of one year and the offer price is Rs. 100 lakhs. In addition, Excel Ltd. will also provide 2 grounds of land free of cost for the construction. A Trainee Accountant has prepared an estimate on the basis of which he has advised that the contract should not be accepted at the price offered. His estimate was as follows: (Rs.lakhs) Land (3 grounds @20 lakhs per ground) | 60 | Drawing and design cost | 7 | Registration | 10 | Materials | | Cement and Sand (In stock at original cost) | 12 | Bricks and tiles (To be ordered-current cost) | 4 | Steel (Firm orders placed- purchase cost) | 10 | Others (To be ordered- current cost) | 10 | Labour | | Skilled | 12 | Unskilled | 8 | Supervisor | 3 | Travel expenses to the site | 2 | Site management expenses | 5 | General Overheads | 7 | Total Cost | 150 | Additional Information 1. Total land required for the project- 3 grounds of which 2 grounds will be provided by Excel ltd. 2. Drawings and design: They have already been prepared by consultant architects and the payment will be made in the next month. 3. Registration: The registration expenses have to be borne by Prestige Builders. 4. Material a. Cement and sand are already in stock and are in regular use. Current...
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...Financial and Management Accounting Unit 6 Unit 6 Structure 6.1 Introduction Objectives 6.2 Meaning Self Assessment Questions 1 6.3 Objectives Self Assessment Questions 2 6.4 Methods of preparing trial balance: Total Method and Balance Method Self Assessment Questions 3 6.5 Preparation op Trial balance Self Assessment Questions 4 6.6 Errors and their rectification Self Assessment Questions 5 6.7 Errors disclosed by a Trial Balance Self Assessment Questions 6 6.8 Errors not disclosed by Trial Balance Self Assessment Questions 7 6.9 Steps to locate the errors 6.10 Trial Balance and adjustments Self Assessment Questions 8 Terminal Questions Answer to SAQs and TQs Trial Balance 6.1 Introduction Journal and ledger are the books containing the details of business transactions which have taken place during a particular period. The purpose of these records is preparation of final accounts – trading account, profit and loss account and balance sheet. Before attempting to prepare final accounts, a summary of the transactions, as depicted by ledger should be available in a form that is easy to classify the assets, liabilities, expenses and incomes. While expenses and incomes are used to prepare trading and profit and loss accounts, assets and liabilities are presented in the balance sheet. Trial Balance stands as a bridge between primary and secondary books on one hand and final statements of accounts on the other hand...
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