¥ PGP-1IM-2016 ccs QUIZ ame: < Question 1: Flamingo Travel Ageney specializes in flight between India and Mauritius, It books passengers on Emirates. Flamingo’s fixed costs are Rs. 20,00,000 per month. Emirates charge # passenger Rs 15000 per round trip ticket. Calculate the number of tickets Flamingo must sell each month to (a) breakeven and (b) make a target operating profit of Rs. 5,00,000 per month in each of the following independent cases: |. Flamingo’s variable costs are Rs, 500 per ticket. Emirates pay Flamingo 20% commission on ticket price. (@) Number of tickets to breakeven Covdatbnbon mazaio® SHleaeve CM 22800 i. Bredeewn = Bredtah - 26 02 seo -J#00} em 2566 \Goorye2 -59S (b) Number of tickets to make a target operating profit of Rs. 5,00,000 Profit= Suey- VC~ byedeat ¥ 06 660 =(m)xa- 2000000 (. S' Uys 2620) BET poke. Il Flamingo’s variable costs are Rs. 200 per ticket. Emirates pay Rs. 800 fixed commission per ticket to Flamingo. (a) Number of tickets to breakeven Cm - 80072005 beo Eigppe gee 208 2°22 drkehy. tf eae Se 29 dy Page 10f4PGP-LIM 7016 ccs QUIZ Time: 35 Minutes ‘Name: _ Roll No: (b) Number of tickets to make a target operating profit of Rs. 5,00,000 = CMxn — 26,00 000 w, § 00600 ae rgccec’ SAbb ee Bukets —Q) Question 2: Polo Ltd manufactures high quality equipment. The company’s plant has an annual capacity ‘of 30,000 units, Polo currently sells 25,000 units at a price of Rs. 1,500. It has following cost structure: Fixed manufacturing costs 15,00,000 Fixed marketing and distribution costs 70,00,000 | Variable marketing and distribution cost per unit 150 | Variable manufacturing cost per unit 300 Consider the following independent cases: |. The manufacturing department proposes to add new features to the product by introducing some changes in manufacturing process. These changes will increase fixed manufacturing cost by Rs. 4,00,000 and variable manufacturing cost by Rs. 15 per unit. ALts current sales quantity of 25,000 units, compute minimum selling price that will allow polo to add new features and maintain its current operating income. pervert Intormne= Saley- Prxedcay} ~ Votablecet+ = 2560x1886 — |5 00066 ~|600 20 — b5oy 25060 vy \gaseaoo- ay, 12950000 v WEP 1128606 - |4 2p 000 -)00%000 a00 Page 2 of aPOP-IM2016 = ' CCS QUIZI ‘Time: 35 Minutes _ Name: _ . Roll No: Il. The marketing department indicates that decreasing the selling price to Rs. 1,400 would increase sales to 30,000 units. This will require polo to increase its fixed marketing and distribution costs. Calculate the maximum inerease in fixed marketing and distribution costs that will allow polo to decrease price to Rs. 1,400 per unit while maintaining its current operating income WM — 656X 302006 lEyr oes. WA NY60X3 0060 —\5 02000 ~ i, = © Pneweose 22506000 1280006 -) 000080 yet RB nerene ea possible v9 E Fired mky Cotts- eee Manimum dniceace ty Rureel mea & 4: she cash dank wit ov polo fo deuwene pule i$ 1250 000 Ry Question 3: Select the right choice. Please note that there are negative marks for wrong answers but not for unanswered questions. 1, Galway Co, management desires cost information regarding its Celtic brand. The Celtic brand is, cost object. b. cost driver. © cost assignment. actual cost. 2. Whjghi of the following is not an assumption of cost-volume-profit analysis? The time value of money is incorporated in the analysis. b, Costs can be classified into variable and fixed components. ¢. The behavior of revenues and expenses is accurately portrayed as linear over the relevant range. Foe mar of our eee only ive Page 3 ofPop-tins s+ ccs QUIZ Name:_ 3. Valley Company sells two products. Product M sells for $12 and has variable costs per unit of $7. Product Q's selling price and variable costs are $15 and $10, respectively. If fixed costs are $60,000 and Valley sells twice as many units of Product M as Product Q, what is the BEP in units for Product M? a 4,000 b, 6,000 «. 12,000 se 8000” 4. The allocation of indirect costs in an activity-based costing system Xe _ may require the costs to be allocated to activities before the costs of the activities can be allocated to the products. b. is simplified because more costs are identified as direct costs. €_eguesthe use of heterogeneous east pool a. is simplified because a limited number of activities are identified as cost objects. 5. Production-cost cross-subsidization results from a. allocating indirect costs to multiple products, b. assigning traced costs to each product. ©. assigning costs to different products using varied costing systems within the same organization. G/ assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products. 6. In refining a cost system a, total direct costs are unchanged because they can be traced in an economically feasible ‘way to the product and traced costs are more accurate. the costs are grouped in homogeneous pools of the same or similar amounts. the criterion of cause-and-effect is used to relate indirect costs to a factor that systematically links to a cost object. d, the organization looks for cost-allocation bases that will provide a uniform spreading of indirect costs to each product. « Page 4 of 4