142014

D 12350
Name.
Iessasessosaesnseenedeesesssessee*******
(Pages:4)
Reg. NO.»essesne sanssdsssese***********
THIRD SEMESTER M.B.A. DEGREE (REGULAR/SUPPLEMENTARY)
EXAMINATION, JANUARY 2022
M.B.A.
BUS 3C 18-STRATEGIC COST MANAGEMENT
(2016 Scheme)
Time: Three Hours
Maximum 36 Weightage
Part A

Answer all questions.

Each question carries 1 weightage.
1. What is 'absorption of overheads'?
2. Define by-product' and joint products.
3. State the advantages of
maintaining cost ledger.
a

4. What is a profit graph ?

5. What do you mean by Standard Cost ?
6. What are the benefits of activity based costing ?
(6x 1 6 weightage)
Part B

Answer any four questions.

Each question carries 3 weightage.

7. Explain the role played by Material Control' in cost control and cost reduction.

8. Discuss the methods used for apportioning the joint costs in case of joint products.

9. The effect of price reduction is always to reduce the profit/volume ratio, to raise the break-even
point and to shorten the margin of safety. Explain and illustrate by numerical example.

10. What is a Cost Driver'? What is the role ofcost driver in tracing cost to products?
11. A Company budgets for a production of 1,50,000 units. The variable cost per unit is Rs.14 and
fixed cost per unit is Rs. 2 per unit. The company fixes the selling price to fetch a profit of 15o on
cost. Required, (A) What is the break-even point ? (B) What is the profit/volume ratio ?
(C)Ifthe selling price is reduced by 5%, how does the revised selling price affects the Break-Even
Point and the Profit/Wolume Ratio ? (D) If profit increase of 10% is desired more than the budget,
what should be the sales at the reduced price?
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142014
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2 D 12350

Company has two Plants at Locations I and II. operating at 100 and 75% of their capacities
ectvely. The company is con sidering a proposal to merge the two plants at one location to
optimize available capacity.
1wing details are available in respect off the two plants, regarding their pregent
performance/operation:
Particulars Location I LocationI
Sales |Rs.in lakhs)
200 75
Variable Costs [Rs. in lakhsl 140 54
Fixed Cost [Rs. in lakhs] 30 14
Or
decision-making purposes, youare
required to work out the following information
The
capacity at which the
merged plan will break-even.
he profit of the merged
plant is required to plant working at 80% capacity III. Sales
earn an overall
profit of Rs. 22,00,000. required if the merged

Part C
(4x 3 12 weightage)
Answer any three the
Each of following.
13. A2Z p.l.c. supports the
question carries 4 weighlage.
covering its engineeringconcept of tero technology or life cycle costing for new
its
principles extended to activities. The financial side
all other areas of this philosophy is nowinvestment
well
decisions
its
machines and the of established and
decision-making. The
machine with a life of Production Manager is torn between the company is to replace a number of
12 Exe Machine, a
machine is chosen it years, and the Wye machine with an more
expensive
machine. The patter of
is likely that it
would be estimated life of 6 years. If the Wye
and relevant
data are
maintenance and runningreplaced at the end of 6
costs differs years by another Wye
shown below: between the two types of
machine
Exe
Purchase price Wye
Trade-in value/brakeup/scrap 19,000
13,000
Annual repair costs 3,000
3,000
Overhaul costs 2,000
2,600
Estimated financing costs (at year 8)
4,000 (at year 4) 2,000
to:
recommend with averaged over machine
life 10%p.a
made. supporting figures, which -Exe; 10% p.a. -Wye You are
machine to required
purchase, stating any
assumptions

142014
 142014
14 XYZLtd. is manufacturing three D 12350
which is
available to the extent of products, A, B and C. All the
61,000 kg. only. products use the same raw material
The following information
is available from
the books and records of the
Particulars company.
Selling price por unit Product A ProductB ProductC
100 140 90
Variable cost per unit
Rs. 75 Rs. 110 Rs.65
Raw material
requirement per unit [kg. 5 8 6
Market demand units-

5,000 3,000 4,000

Advise the
company about the most profitable product mix and also
compute the amount of profit
resulting from such product mix if the fixed costs are Rs.
1,50,000.
15. Explain the various classifications of costs and its elements.
16. Discuss the method of service cost
analysis.
17. What is kaizen
costing? What are its benefits ?
(3x 4 12 weightage)
Part D

Answer the following.

Compulsory question.
18. M/s.PQR Ltd. produces only two products: Computer Parts and Cell-Phones. Thecompany uses a
normal cost system and overhead costs are currently allocated using a plant-wide overhead rate
based on direct labor hours. Outside cost consultants have recommended, however, that the company
use Activity-Based Costing (ABC) to charge overhead to products. The company expects to produce

4,000 computer parts and 2,000 cell phones in FY 2019. Eachcomputer part requires two direct
to produce. The direct material
labor hours to produce and each cell phone requires one-half hour
follows:
and direct labor costs included in the two products are as

Computer Part (Rs.)|Cell-Phone (Rs.)_

Ttem 30 17
Direct Material (per unit)
16 4
Direct labor(per unit)
Overhead Data for FY 2019
Budgeted (Estimated) Total Factory
Budgeted Overhead (Rs.)Estimated Volume Level
Activity 20 setups
Production setups 80,000
5,000 lbs
Material Handling 70,000
1,20,000 6,000 boxes
Packaging and Shipping
Total Factory Overhead 2,70,000

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142014
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4 D 12350
Based an
require theseanalysis of the three
activities as follows overhead activities, it was estimated that the two products wouid
in 1999:

| Activity
Production Setups Computer
5 setups
Part Cell-Phone Overall Totals
Material handling 15 setups 20 setups
1,000 lbs.
Packaging and Shipping 4,000 4,000 lbs. 5,000 1bs
boxes 2,000 boxes 6,000 boxes
Required
Find the cost
(1i)
of each product using a plant-wide rate based
Pind the activity cost rates for
on direct labor
hours;
shipping; and setups, material handling, and
packaging and
(ii) Cost out the
two products using an
activity-based costing system.
(6 weightage)

2014
 D 91564
(Pages: 93) Name...

Reg. No....
THRD
SEMESTER M.B.A. DECREE EXAMINATION, JANUARY Z0
(CUCSS)
M.B.A.
BUS 3C 18-STRATEGIC coST MANAGEMENT
(2016 Admissions)
Time Three Hours Maximum : 36 Weightage

Part A

Answer all questions.

Each question carries 1 weightage.
1. Define the terms Prime Cost and Overheads.
2. What are equivalent units ?
3. What do you mean by CVP analysis ?
4. Define Pareto analysis.
5. Describe the two potential problems that should be avoided in relevant-cost analysis ?

6. What are the various categories of cost drivers?

(6x 1 6 weightage)
Part B
Answer any four questions.
Each question carries 3 weightage.
7. Discuss the various process costing methods in service sector.
8. What are the features of JIT ? What are the features of JIT ?

9. Target costing helps the organization to balance all the aspects that are beyond the control of an
organization." Discuss.

10. "Strategic cost management has become an essential area these days. Whileformulating the strategy
for the accomplishment of overall organizational objectives, diferent cost drivers should be clearly
identified.

11. Sriram enterprises manufacturers and sells black cleanser worth Rs. 40,000, white cleanser worth
scanted cleaner worth Rs. 20,000 and naphthaiene balls worth Rs. 10,000 every month.
Thefirm's tool fixed costs per month are Rs. 24,400. The variablecosts are: on block cleanser 60%
on white cleanser 68% on scented cleanser 80% and on naphthalene balls 40%.

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 D 91564
2
12. Desktop 1Co. manufactures and sells 7,500 units of a product. The full Cost per unit is 100. The

Required: (1)
has fixed its Investment of 9,00,000.
pany price so as to earn 20%a return on an
Calculate the Selling Price per unit from the above. Also, calculate the mark-up % on the Full Cost

per unit.

(11) f the Selling Price as caleulated above represents a mark- up% of 40% on Variable Cost

per unit. Calculate the Variable Cost per unit.

C l a t e the Company's Income ifit had increased the Selling Price to 115. At this price,
would have sold 6,750 units. Should the company have increased the Selling
ompany
price to 230 ?
ne
proprietrix Ms. Anuradha
Ses
shah, being basically a science graduate, wonders at what con bined
volume dues she
really start earning profit. Please her in arriving at such a sales volumne
4x3 12 weightage)
Part C
Answer any three of the
following.
Each question carries 4
13. weightage.
Differentiate between marginal
14.
costing and absorption costing.
From the
following figures, find the Break-Even Volume
cost per ton
Rs.35.50 Fixed Cost Rs. 18.02 Selling price per ton Rs.69.50-VariaDie
lakhs If this volume
the additional
profit for an added production of 40% represents 40% capacity, what 1s
lower for 20%
production and 15% lower than the capacity, the selling price of which is 100
15. Discuss the importance
existing price, for the other 20% capacity ?
B] Break-even
of the following terms in relation to marginal
point ; and C] Margin of safety. costing. A] Key factor
16. XYZ Ltd. is
manufacturing
three products, A, B and C. All the
which is available to the
extent of 61,000 kg
products use the same raw material
The
only.
following information is available from the books
and records of the
company.
Particulars
Selling price per unit
Product A Product Product C
Rs. 100 Rs. 140
Variable cost per unit Rs. 90
Rs. 75 Rs. 110
Raw material Rs. 65
requirement per unit [kgl 5 8
Market demand - units 6
5000 3000
Advise the company about the most 4000
profitable product mix and also compute the
resulting from such product mix if the fixed costs amount of profit
are Rs. 1,50,000.
17. Discuss the various cost control
techniques.
(3x 4 12 weightage)
 D 91564
3

Part D
Anser the
following
compulsory question whiclh carries 6 tage.
18. A
Company manufactures two
products, X and Y. The product X is a low
only Rs.5,000 p.a. Product Y is
volu nits p.a.
high volume and 1abor intensive, 15
Product X takes 6
labor hours to make one unit but Y sa
requires 8 hours per u
Details of costs for
materials and labor for each product are as folloWS
Particulars Product X | Product Y

Direct Materials Rs. 200 100

Direct Labor @Rs.10
per hour 60 80

Total 260 180

The company works 1,00,000 direct labor hours p.a. Total manufacturing overhead costs are

Rs. 17,50,000 p.a.

You are required to compute per unit cost of each product using, I. Direct labor hour rate method
for absorption of overhead costs and II. Activity Based Costing technique for absorption of overhead

costs.
(1x 6 6 weightage)
 D 725400
(Pages4) Name.
Reg. No..
THIRD SEMESTER M.B.A. DEGREE
ExAMINATION, DECEMBEK 2017

(CUCSS)
M.B.A.
BUS 3C 18-STRATEGIC cOST
MANAGEMENT
(2016 Admissions)
Time: Three Hours Maximum : 36 Weightage
Part A
Answer all questions.
Each question carries 1 weightage.
1. Briefly discuss the techniques of separation of costs.
2. Enumerate the major managerial applications of
Marginal Costing.
3. Briefly discuss the different methods for
accounting for By-products.
Scientific cost management through the applieation of cost accounting principles is an imperative
for the healthcare sector in Kerala'. Critically comment on the statement. Substantiate your views.
5. Briefly explain the concept of Value Analysis.
6. What is Kaizen Costing ? What is its relevance in a competitive business scenario ?
(6x 1=6 weightage)
Part B

Answer any four questions.

Each questions carries 3 weightage.
7. What is Target Costing? Discuss its special significance in the current globalised regime.
8. Scientific cost management through the application of cost accounting principles is an imperative
for the healthcare sector in Kerala'. Critically comment on the statement. Substantiate your views.
9. ABC Ltd. produces three products at a joint manufacturing cost of Rs. 1,250 000.

The following information has been provided

Product Volume Further Processing Costs Selling Price per Unit

(Rs.) (Rs.)
A 25,000 750,000 40

40,000 750,000 50
B
35,000 210,000 20
C
the Constant Gross Margin Percontage method,
Required:Allocate the joint costs using
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 2 D 72540
s. Leather Lusters LAd.
(LLL) is a manufacturer of high quality leather that is Used
manuiacture of for the
leather shoes. LLL operates in a very competitive environment. t seis
nshe manufacturers who in turn manufacture and market shoes under their own
n
e
brands.
Oniy chango Rs. 24 per unit
CosL, calculate the
of leather. If the company's intended profit margin is 20 on
target cost per unit. Ir 30
% of the cost per unit of
materials, what is the leather is related to direct
Target Cost per unit for direct materials for
1 What do you
mean by Cost Driver ? Discuss
LLL?
examples. its use in Activity Based Costing (ABc) with suitable
A B C Ltd.
commenced business 01st January
shows on
2018 making one
product only. Its cost card
Particulars
Amount (Rs.)
Direct labour
10
Direct material
16
Variable Production overhead
Fixed Production overhead
10
Standard production cost
40

The fixed
production overhead figure has been
of36,000 units per annum. calculated on the basis of a
The fixed budgeted normal output
right from January 2018. production overhead incurred was Rs.
30,000 per month
Selling, distribution and
administration expenses are as follows:
Fixed Rs. 20,000 per month.
Variable 15 % of the Sales
The selling price per unit is Rs. value.
70. The number of units
produced and sold were as follows:
January 2018 (units)
Production
2,000
Sales
1,500
Prepare income-statements
(January 2018) under the
(i) Absorption Costing; and (i) Marginal following:
Costing.
(4 x 3 12 weightage)
 3 D 72540

Part C
Answer any three
questions.
Each question carries 4
e
weightage.
Naizen
Costing is suilable ina Cost. Reduction setting levant
in Cost
Control Standard Costing i3

environment. Critically comment on the given statement

cica
differences between the two types of costing noted above, and also the difference between Cost
Reduction and Cost Control.
ont product costs can be allocated based on two broad approaches (i) Benefits-receve
approaches ; and (ii) Relative market value
approaches". Elucidate.
1. Write a note on the features of Aetivity Based Costing (ABC) with a focus on the methodology

involved in the treatment of indirect costs

(Overheads).
6. From the following particulars of M/s. God's Own Canteen - a canteen based in Kozhikode specializea

in serving meals, relating to the cost 4500 meals served by its, find the Total Operating Cost, ana

the Cost per Meals:

Rs.
Food 25,000.00

Bakery Items 8,000.00

Beverages 6,500.00

Salaries & Wages of Staff 14,000.00

Heating and Lighting 4,000.00

Consumable stores 2,000.00

Repairs and Maintenance 3,000.00

Depreciation 1,000.00

Premises rent 2,000.00

1,500.00
Interest
the new trends in strategic Cost Management?
17. What are
(8 x4 12 weightage)

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 D 72540

Part D
Answer the following
compulsory question.
The question carries 6
weightage.
Faamount Structures Ltd.
has
operating details of these two two plants viz. Plant P and Plant S. The following are the
plants under the company
Particulars Plant P (Rs.) Plant S (Rs.)
Sales
20,00,000 16,00,000
Variable Cost
Fixed Cost 12,00,000o 10,00,000
4,00,000 4,00,000
Capacity utilization 100 % 50 %
tis
required to merge both the
plants. You required to ascertain the following:
are
(a) Break-even sales and break-even
(6) Profit and
capacity of the merged plant.
profitability of operating the merged plant at 90% of the
(c)
Capacity level of operation, if capacity.
before merger) has to profit of Rs. 6,00,000 (the profit made by both the
be made by the plants
merged plant.
(1x 6 6
weightage)
D51902
(Pages 4) Name... ******

Reg. No.
TkD
SEMESTER M.B.A, DEGREE EXAMINATION, DECEMBER 2018

(CUCSS)
M.B.A.
Finance
BUS 3C 18-STRATEGIC CoST MANAGEMENT
(2016 Admissions)
Time Three Hours Maximum: 36 Weightage

Part A

Answer the following.

Each question carries 1 weightage.
1. Differentiate between Cost Control and Cost Management.
2. State the need for Strategic Cost Management.
3. Why marginal costing is preferred than actual costing in estimations ?

4. Enlist few techniques of cost control.

5. Describe Kaizen costing.
6. Define Margin of Safety.
(6x 1 =6 weightage)
Part B

Answer any four of the following.

Each question carries 3 weightage.
chain.
reference to management of value
7. Discuss cost management with
raise the break-even
reduction is always to reduce the profit/volume ratio, to
8. The effect of price
and illustrate by numerical example.
and to shorten the margin of safety. Explain
point
eliminates the wastage of r e s o u r c e s .
9. Briefly explain how JIT
Rs. 20,000, white phenyl worth
manufacturers and sells black phenyl worth
10. Anuradha enterprises
and naphthalene balls worth
Rs. 5,000 every month.
Rs. 25,000, scanted phenyl worth Rs. 10,000 60 %
Rs. 14,700. The variable
costs are on block phenyl
month are
The firm's tool fixed costs per
% and on naphthalene balls
40 %.
68% on scented phenyl 80
on white phenyl
combined
science graduate, wonders at what
Ms. Anuradha Shah, being basically a
The proprietrix Please her in arriving at such a sales volume.
dues she really
start earning profit.
sales volume
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 D 51902

Discuss the key

characteristics of successful target costing
12
100. 1he
O Co. manufactures
and sells 7,500 units of a produet. The full Cost per unit i
C
p a n y has fixed its price so as to earn a equir
20 %return on an Investment of 9,00,000. Kequirecd ;

h the
u l a t e the Selling Price per unit from the above. Also, calculate the mark-up
on

Full Cost per unit.

t h e Selling Price as calculated above represents a mark- uph of 40% on Variable Cost

per unit. Calculate the Variable Cost per unit.

(c) alculate the Company's Income ifit had increased the Selling Price to 115. At this price,

e ompany would have sold 6,750 units. Should the company have increased the Selling
price to '230 ?

r e s p o n s e to competitive pressures, the Company must reduce the price to 105 next
year, in order to achieve sales of 7,500 units. The company also plans to reduce its

investment to 8,25,000. If a 20% return on Investment should be maintained, what is the

Target Cost per unit for the next year ?

(4x 3 12 weightage)
Part C

Answer any three of the

following.
Each question carries 4
weightage.
13. What do you mean by cost drivers ? Identify various cost drivers in service
industry.
14. What is Marginal Cost Pricing ? What ate the
arguments in favor and
pricing?
against marginal cost

15. Precision Auto

Comp Ltd. Manufactures and sells two automobile
identical with slight variation in components A and B. Both are
design. Although the market for both the
the market share of the products is the same,
company for product A is very high and that of product B
very The low.
company's accountant has prepared the following profitability statement
for the two products Cost
ofproduction : (same for both the products):
Direct Material Rs. 125
Direct Labor Rs. 24

Direct Expenses (sub-contract charges) Rs. 36

Overheads (400 % of direct labor) Rs. 96

Total Cost Rs. 281
 D 51902
3

Product A Product B Total

Quantity sold
Unit sale price 1,24,000 23,150 1,47,150

Total sales realisation 300 290

4,39,13,500
Cost of sales as
above
4,13,49,150
Margin 25,64,350
COmpany's marketing manager, after attending workshop on activity-based
l t a n t ' s figures. The nearest competitor's prices for the two productscOsU
are ks.ao
a
d0 a
O per unit
respectively and, if the company can match the competitor price
s can produce nis
0 0 nOS. each of the two products. The Production Manager confirms that he
Poauct mix with the existing facilities. The management engages you as consuUny aua
following facts have been identified
by you:
a)
Product A undergoes 5 operations and product B undergoes two
subcontractors, although the total subcontract charges are the same for both the
operations Dy
products, and
(b) 75 % of the overheads is accounted for by three major heads relating to subeontracting
and from the
operations, viz., ordering, inspection and movement of components, to
sub-contractor's works.
Prepare a revised profitability statement to find out if the marketing manager's proposal is viable.

16. ABC Ltd. manufactures only one product which are identical in every respect.
The following information relates to April and May 2018:
(a) Budgeted costs and selling prices April May
Rs. Rs.
Variable manufacturing cost per unit 2.00 2.20

Total fixed manufacturing cost

units per month) 40,000 44,000
(based on budgeted sales of 25,000
Total fixed marketing cost

units per month) 14,000 15,400

(based on budgeted sales of 25,000
5.00 5.50
Selling price per unit
Units Units
(b) Actual production and sales achieved:
24,000 24,000
Production
21,000 26,500
Sales

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 D 51902

T h e r e was no stock of finished goods at the beginning of April 1986. There was no wastag*
or loss of finished
goods during either April or May 1986.
a Actual costs incurred corresponded to those budgeted for each month.

a
1) e he relative effects on the monthly operating profits ofapplying the following methods:
Absorption costing; and (ii) Marginal costing.
17. Briefly explain the steps in Strategic Cost Management Programme.
(3 x 4 = 12 weightage)

Part D
Answer the
following compulsory question which carries 6 weightage.
18. S. Chand and Co., a
leading publisher, publish two variance ofa text book. One is paper back and
h e other is
hard bound.
The firm
Management is considering publishing only the higher quality book.
assigns its Rs. 5,00,000 of overhead to the two types of books. The overhead is compOsed
of Rs. 2,00,000 of utility and Rs. 3,00,000 of
quality control inspector's salaries.
Some additional
data follow Paper back Hard bound
Revenues Rs. 16,00,000 Rs. 14,00,000
Direct cost
Rs. 12,50,000 Rs. 6,00,000
Production (units) 5,00,000 3,50,000
Machine hours 42,500 7,500
Inspections 2,500 12,500
(i) Compute the overhead cost that should be allocated to each type of text book using cost
drivers appropriate for each
type of overhead cost.
ii) The firm has used machine hours to
allocate overhead in the post. Should the publisher
stop producing the paper back books ? E>xplain why management
action and what its decision should be.
was
considering this

(1x6 6 weightage)
C 32782
(Pages:4) Name.. *****

Reg. Oos.oesseoedoeereeosee**********
T dSEMESTER M.B.A. DEGREE EXAMINATION, DECEMBER 017
(CUCSS)
BUS 3C
18-STRATEGIC COST MANAGEMENT
(2016 Admissions)
Time: Three Hours
Maximum 36 Weightage

Part A

Answer all questions.

Each question carries 1 weightage.
anagement Accounting is simply another name of Cost Accounting'. Critically comment.
2. Enumerate the assumptions of Break-Even Analysis.
3. Distinguish between Marginal Costing and Absorption Costing.
4. Define the concept of Activity Based Costing (ABC). What is a Cost Driver ?

5. Briefly explain the concept of Value Analysis.

6. What is Kaizen Costing? What is its relevance in a competitive business scenario ?
(6 x 1 6 weightage)

Part B

Answer any four questions.

Each question carries 3 weightage.
in the current globalised regime.
7. What is Target Costing ? Discuss its special significance
concepts of
Non-Linear Break-Even Chart ? In this context, discuss the
8. What do you mean by
Maximum Profit with the help
of a suitable diagram.
Lower BEP, Upper BEP, and
and D. The
of products under four brands A, B, C
and sells four types
9. ABC Ltd. manufactures The total
30% and 5% of products A, B, C and D respectively.
sales mix comprises 25%, 40%, Costs are Variable Costs: Product
60% A
are Rs. 60,000'
Operating
p.m.).
budgeted sales (100% Price Product D 40% of
Price Product C 80% of selling
Product B 68% of selling
of selling Price Calculate the break-even-point
for the products on
Costs Rs. 14,700 p.m.
selling Price Fixed
overall basis.

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 C 32782
2
card shoWs:
10 only. Its cost
product
commenced business on 1t April 2017 making one
Particulars Amount (Rs.)

Direct labour 6

Direct material 1
8

Variable Production overhead 2

14
Fixed Production overhend 5

Standard production cost 20

production overhead figure has been calculated on the basis

of a budgcted normau output 15
Rs. 15,000 each
overhead incurred in April
was

" per annum. The fixed production

month. Selling, distribution and administration expenses are as follows:

Fixed Rs. 10,000 per month

Variable 15% of the Sales
value
The selling price per unit is Rs. 35. The number of units produced and sold were as follows :

April 2017 (units)

Production 2,000
Sales 1,500
Prepare income statements (April 2011 under Absorption Costing and Marginal Costing
A L t d . produces three produets (X, Y and Z) in ajoint process costing Rs. 100,000. The products
can be sold as
they leave the process, or they can be processed further and sold. The cost accountant
has provided you with the
following information :
Sales Price Separable Further Sales Price After
Produet Unit Volume at Split-Off (Rs.) Processing Costs (Rs.) Further Processing (Rs.)
X 3,000 10 60,000 25
Y 4,000 15 50,000 30
8,000 20 90,000 35
Assume that all processing costs variable costs.
are
Required: Which products should XYZ sell at
split-off, and which products should be processed further?
12. Explain the features of Enterprise Resource Planning (DERP). What are the benefits of ERP ?
4x 3 12 weightage)
 C 32782
3

Part C

Answer any three questions.

Each question carries A weightage.
oCompare and contrast
and Standard
Cost Reduction and Cost Control. In this context, compare Kaizen Costing
Costing with regard to their basic
philosophies.
14.J 1s an imperative for higher onerational
Inalan
scenario too, at least
efficiency of manufacturing
comp21
an 'Indianiscd JIT
upgraded to a foil fledgcd JIT
must be put place
in now, s0
na
in due course". Comment on the statement. Substantiae
l. ABC LMd. The
manufactures
and sells 7.500 units of a product. The full cost per unit 1s
Company has fixed its price so as to earn a 20% return on an Investment of Rs. 9,00,000.
Required
Calculate the Selling Price per unit and also the mark-up % on the Full Cost per un
t h e Selling Price as càlculated above represents a mark-up % of 40% on Variable Cost

per unit. Calculate the Variable Cost per unit.

At this
alculate
the Company's Income ifit had increased the Selling Price to Rs. 115.
the
have increased
price, the Company would have sold 6,750 units. Should the company
Selling price to Rs. 230?
(av) In response to competitive pressures, the company must
reduce the price to Rs. 105 next
also plans to reduce its
year, in arder to achieve sales of 7,500 units. The company
what is
investment to Rs. 8,25,000. If a 20% return on Investment should be maintained,

the Target Cost per unit for the next year?

at selling prices of Rs. 3
and Flash,
16. Excel Ltd., is manufacturing and selling two products: Splash
been outlined for the financial year (PY)
and Rs. 4 rèspectively. The following sales strategy has
Rs. 3.50 lakhs
Rs. 7.20 lakhs in the case of Splash and
2019:(1) Sales planned for FY 2009 will be
(iii) Profit
(ii) Break-even is planned at 60% of the total sales of each product,
in the case of Flash, in the case
at Rs. 69,120 in the case of Splash and Rs. 17,500
for the year to be achieved is planned the present
reduction programme and reducing
This would be possible by launching a cost
of Flash. allocated as Rs. 1,08,000 to Splash
and Rs. 27,000 to Flash.
annual fixed expenses of Rs. 1,35,000 the
and 12.5% respectively to mect
of Splash and Flash will be reduced by 20%
The selling price clearly the following
You are required to present
the proposal in financial terms giving
competition. break-even as well as the total
Number of units to be sold of Splash and Flash to
information, (a) Reduction in fixed expenses
and Flash to be sold during FY 2019. (b)
number of units of Splash
for FY 20019.
product-wise that is envisaged by the cost Reduction Program
and relevance of activity-based costing.
17. Discuss the need, importance
(3 x 4 12 weightage)
Turn over
 C 32782

Part D

Anser the following compulsory question which carries 6 weightage.

Excel Ltd. has two plants viz. Plant Aand Plant B. The following are the operating details of
these two
plants under the company:
Particulars Plant A (Rs.) Plant B (Rs.)
Sales
10,00,000 8,00,000
Variable Cost 6,00,000 5,00,000
Fixed Cost
2,00,000 2,00,000
Capacity utilization 100% 50%
t 1S required to merge both the plants. You are required to ascertain the following
(a) Break-even sales and break-even capacity of the merged plant.
() Profit and
profitability of operating the merged plant at 90% of the capacity.
(oCapacity level of operation, if profit of Rs. 4,00,000 (the profit made by both the plants
before merger) has to be made
by the merged plant.
(1x 6 6 weightage)