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10 Af 401 Ma PDF
10 Af 401 Ma PDF
Required:
Prepare a columnar report showing operating income for using the methods of:
(a) Flexible budget. 04
(b) Standard direct costing. 04
(c) Absorption costing. 04
MA-Nov.2013 1 of 4 PTO
Marks
Q. 3 (a) State some uses and applications of standard cost. 03
(b) Al-Noor (Pvt.) Limited uses standard cost system. The standard cost card for one of its
product shows the following material standards:
Rupees
Material Kilogram Cost/ Kg. Amount
Alpha 40 400 16,000
Beta 45 500 22,500
Gama 40 600 24,000
125 500 62,500
Evaporation (20%) (25)
100 625 62,500
Material used for recent production run of 100 kilograms output are:
Rupees
Material Kilogram Cost/ Kg.
Alpha 45 390
Beta 40 550
Gama 45 550
Required:
Calculate the following:
(i) Material price variance. 02
(ii) Material mix variance. 04
(iii) Material yield variance. 03
(iv) Total material variance. 01
Q. 4 (a) Denex Limited is exporting more than 80% of its production and pays 1% tax on
turnover. The company is considering to buy a generator. The cost of generator is
Rs.20,000,000. Following cash flow (assumed to be incurred at year end) are associated
with it:
Rs. ‘000’
Year-1 Year-2 Year-3 Year-4
Running costs 6,000 8,000 10,000 12,000
Resale value 12,000 8,000 6,000 2,000
MA-Nov.2013 2 of 4
Marks
Required:
(i) Calculate present value of cost in perpetuity of the new generator. 01
(ii) Calculate net present value for replacing now; after one year, after two years and
after three years. 07
(iii) Advise optimum replacement period. 01
Q. 5 (a) Hitech Computers (Pvt.) Limited has launched new computer into market. Budgeted
production for first quarter (January to March 2013) is 55,000 units. The variable cost is
Rs. 16,000 per unit and fixed costs for the quarter are expected to be Rs. 220,000,000.
The company plans to set price at a mark-up of 20% of full cost. Price can be varied in
multiple of Rs. 1,000 ranging from Rs. 24,000 per unit to Rs. 32,000 per unit. The price
and demand have following relationship (demand curve equation):
P = 40,000 – 0.4x
Where: P = Price at certain demand level;
x = Demand level
Required:
(i) Calculate selling price under full cost plus profit option. 04
(ii) Tabulate demand, total contribution and profit for price range. 09
(iii) Advise optimum price. 02
(b) Vision International manufactures two products, the LED and the LCD. They pass
through three processes; Proces-1 Proces-2 Proces-3. There are 24 hours of time
available per day for all processes. Information relating to these products is as follows:
Rs./ Unit
LED LCD
Selling price 50,000 40,000
Direct materials 35,000 30,000
Direct labour 2,500 5,000
Maximum demand per day (units) 15 20
Time required per unit (hours):
Proces-1 0.60 0.70
Proces-2 1.00 0.50
Proces-3 0.50 0.80
Additional Data: Rs./ Day
Labour cost 135,000
Variable overhead 60,000
Fixed cost 45,000
Required:
(i) Identify bottleneck process. 02
(ii) Calculate unit contribution per scarce source under throughput accounting. 02
(iii) Rank these products. 01
(iv) Calculate optimum production plan. 02
(v) Calculate throughput accounting (TA) ratio for each product. 03
MA-Nov.2013 3 of 4 PTO
Marks
Q. 6 The Supreme Electric uses furnace oil to generate electricity. The relevant data for furnace oil
is as under:
Cost of furnace oil (Rs.) 39,630 per tonne
Ordering cost (Rs.) 1,500 per order
Annual demand 10,400 tonnes
Carrying cost 12.0% per annum
Lead time usage (normally distributed):
Average 200 tonnes
Minimum 100 tonnes
Standard deviation (ó) 80 tonnes
The supplier offers a discount of 2% for order of 100 tonnes or more and a discount of 5% for
order of 200 tonnes or more.
Required:
Calculate the following:
(i) Economic Order Quantity (EOQ) ignoring discount. 02
(ii) Total annual cost of furnace oil under (i) above. 02
(iii) Total annual cost of furnace oil under discount of 2%. 02
(iv) Total annual cost of furnace oil under discount of 5%. 02
(v) Optimum order size. 02
(vi) Re-order level at 95% confidence level of not being stock-out (having distribution table
value of 1.65). 02
(vii) Maximum inventory level. 02
(viii) Minimum inventory level. 02
(ix) Average inventory level 02
THE END
PRESENT VALUE FACTORS
Year 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20%
1 0.9524 0.9434 0.9346 0.9259 0.9174 0.9091 0.9009 0.8929 0.8850 0.8772 0.8696 0.8621 0.8547 0.8475 0.8403 0.8333
2 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 0.7972 0.7831 0.7695 0.7561 0.7432 0.7305 0.7182 0.7062 0.6944
3 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 0.7118 0.6931 0.6750 0.6575 0.6407 0.6244 0.6086 0.5934 0.5787
4 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6587 0.6355 0.6133 0.5921 0.5718 0.5523 0.5337 0.5158 0.4987 0.4823
5 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5935 0.5674 0.5428 0.5194 0.4972 0.4761 0.4561 0.4371 0.4190 0.4019
6 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5346 0.5066 0.4803 0.4556 0.4323 0.4104 0.3898 0.3704 0.3521 0.3349
7 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4817 0.4523 0.4251 0.3996 0.3759 0.3538 0.3332 0.3139 0.2959 0.2791
8 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4339 0.4039 0.3762 0.3506 0.3269 0.3050 0.2848 0.2660 0.2487 0.2326
9 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 0.3606 0.3329 0.3075 0.2843 0.2630 0.2434 0.2255 0.2090 0.1938
10 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3522 0.3220 0.2946 0.2697 0.2472 0.2267 0.2080 0.1911 0.1756 0.1615