PG — 882 Il Semester M.F.A. Examination, June 2015 FINANCE AND ACCOUNTING Paper - 2.5 : Strategic Cost and Management Accounting Time : 8 Hours Max. Marks : 80 SECTION-A ‘Answorany ten of the following sub-question. Each sub-question carrios, 2 marks. (102-20) 1, a) What is cost accounting ? ») Define the concept of re-engineering, ©) What do you mean by transler pricing ? ) What is JIT ? €) What do you mean by overheads ? 1) Define the term value engineering. 9) What is product design ? hh) Write a short note on business process, |) What is target costing ? |) What is waste ? k) Define the concept of cost driver. 1) Whats strategic planning ? SECTION-B ‘Answer any three questions. Each question carries five marks. (3x5=15) 2. Strategic management accounting is base for strategic business decision Comment. 3. Write an analytical note on value chain analysis.PG~882 2 ‘a 4, The following are the details of the cost of manufacture of 4000 sewing machines. Faw material : ‘Opening stock 70,000 Closing stock 9,800 Purchases 1,05,000 Factory wages 190,000 Factory expenses 35,000 ‘Administrative expenses 10,000 the cost of labour increased by 20% and that of material by 15%. What rate should be tended for the supply of 2000 such machines so that profit eamed is, 10% on tumover. ‘5. Acompany is planning 2 new product market information suggest thatthe product ‘should sell 10,000 units at Rs. 21 per unit. The company seeks to make a mark-up ‘of 40% product cost. Its estimated that lifetime costs of the product wil be as follows. Development costs ~ Rs. 50,000, Manufacturing cost Rs. 10 per unit and end of life cost Rs, 20,000. You are require to calculate 1) What isthe target cost of the product ? ( 2) Whats the original life cycle cost per unt ofthe product ? 8. Write a detail note on multinational pricing, SECTION-C ‘Answer any two questions. Each question carries 15 marks. (2x15-30) 7. Whatare the difference between cost management and cost accounting ? 8, What are product cost categories ? Explain in detail2 9. X Ltd., manufactures four products A, B, C and D. Output and cost dala is 10. follows, Output] N2.of ) Materials] Direct Labour] Machine Products | (yin | Products runs cost per | hours per | hour per in the period | _unit unit unit A 20 2 10 1 co [8 20 2 50 3 3 e 200 5 20 1 1 D 200 5 80, 3 3 Direct labour costs 10 per hour over head cost are as follows Short run variable cost 40,560 Sot-up cost 14,000 Scheduling cost 10,080 Material handling cost 7.840 Total 42,480 Calculate production cost under, 1) Activity base costing using machine hours rate as cost driver for recovering short run variable cost and number of production runs as cost driver for recovering other overheads and 2) Traditional volume based costing, ‘ABC Company is contemplating to introduce a new products having 3 years of life. The following costs are estimated to be incurred at different siages ofits life yale. Research and development cost Product design cost Production cost First year ‘Second yes ‘Third year ar Product disposal cost (At the end of third year) Rs. 300,000 2,00,000 4,00,000 41,50,000 2,00,000 40,000PG-8a2 + Proposed revenue from the product : Ptyear 400,000 11° year 4,00,000 I year '8,00,000 ‘The ABC Company's target DCF rate of retum is 10% present value factor for! rupee at 10%. 1Syear ost 2 year 083 3! year 075 ‘You are require to determine : a) Total life cycle cost of the product ) Assess the viability of launching the product. SECTION-D 11, Answer the following case properly and answer the question given at the end. (tet Most of the modem organization having justin time approach technique in order ‘to rescue from sluggish profit, poor quality and productive in efficiency. However, iT often landed forits employees benefits like employees moral and sel-esteem. In addition to this, JIT may also cause company to struggle and may produce a ‘good deal of frustration. In some cases, JIT not ensure expected results. Require: 41) You are require to explain the problems which encounter by company while implementing a JIT System. 5)PG -712 Il Semester M.F.A. Examination, June 2015 (cBcs) FINANCE AND ACCOUNTS Paper - 2.5 : Strategic Cost and Management Accounting Time : 8 Hours Max. Marks : 70 SECTION-A 1. Answer any seven of the following sub-questions in about $-4 lines each, Each sub-question carries two marks. (72214) a) Whatis Strategle Cost Management ? ») Define Value analysis. ) What is Maturity in Product ite cycle? ‘d) What is penetration pricing policy ? @) Define Business Process Re-engineering ? 4) What do you mean by target costing ? ) What is Strategic Analysis of Cost ? h) State any four objectives of JIT i) What is pricing policy ? |) What is Target Rate of Return ? Pro.PG- 712 2 SECTION-B ‘Answer any four of the following in about one page, Each question carries 5 marks. (45220) 2. How can Business Process Re-engineering be applied o an organization ? 3. Briefly explain the methodology of Total Quality Management (TOM). 4. The Best industries Ltd. has 2 divisions, A and B. Division A manufactures product X which it sells in outside market as well as to Division B which processed it to manufacture Z. The manager of Division B has expressed the pinion that the transfer price is too high, ‘The two divisional managers are about to enter into discussions to resolve the conflict, and the manager of Division’A to supply him with some information prior to the discussions. Division A has been selling 40000 units to outsiders and 10000 units to Division B, allat Rs. 20 per unit tis not anticipated that these demand will change. The variable cost is Rs. 12 per unit and the fixed costs are Rs. 2 lakhs. ‘The manager of Division a anticipates that Division B will want a transfer price of Rs. 18. If he does not sell to Division B, Rs. 30,000 of fixed costs and Rs. 1,75,000 of assets can be avoided. The manager of Division A would have ‘no control over the proceeds from the sale of the assets and is judged primarily on his rate of raturn. a) Should the manager of Division A transfer its products at RS. 18 to Division B. 'b) What is the lowest price that the Division A should accept ? Support your decision.PGQ-712 5. Explain the different methods used in the fixation of transfer price in the ‘organization. 6. Baroley Ltd. has decided to adopt JIT policy for materials. The following effects of JIT poligy are identified = 2) To implement JIT, the company has to modify ts production and material receipt facilities at a capital cost of Rs. 10 lakhs. The new machine will require @ cash operating cost Rs. 1,08,000 p.a. The capital cost will be depreciated over 5 years. b) law material stock holding will be reduced from Fis. 40 lakhs to Rs. 10 lakhs. ©) The company can eam 15% on its long-term investments ) The company can avoid rental expenditure on storage facilities amounting to Rss. 33,000 p.a. Property taxes and insurance amounting to Rs. 22,000 will be saved dueto JIT programme. e) Presently there are 7 workers in the store department at a salary of Rs, 5,000 each per month. After implementing JIT scheme, only 5 workers will be required in this department. Balance 2 workers’ employment will be terminated. 4) Due to receipt of smaller lots of Raw materials, there willbe some disruption ‘of production. The cost of stock-outs are estimated at Rs. 77,000 per annum, Determine the financial impact of the JIT policy. Is it advisable for the company to implement JIT system ? 7. Briefly explain the steps involved in the implementation of Activity Based Costing,PG - 712 + SECTION-C Answer any three of the following. Each question carries 12 marks, (8x12=36) 8, Rolevant data relating toa company are Particulars Production and Sales (units) Rawimateral usage in units 10 22 Raw material costs (Re) 50 40 22 | 49,52,000 Direct labour hours 25 4 9,42,000 Machine hours 25 2 2,94,000 Direct labour coats (Rs) 16 24 12 No. of production runs 6 “4 40 60 No, of deliveries 18 6 40 64 No. of receipts 60 140 880 1080 No. of production ordors 30 20 50 100 Overheads : (in Rs.) Sotup Machines 15,20,000 Receiving 8,70,000 Packaging 5,009,000 Engineering 7,486,000 The company operates a JIT inventory policy and receives each component ‘once per production run,s Pa -712 Required: i) Compute the product cost based on direct labour hour recovery rate of return ji) Compute the product cost using Activity Based Costing, 9. Briefly explain the role of cost accounting in strategic planning and management control. 10. A company has prepared the following budget for the year: Particulars | 60% Level of Activity (R.) | 80% Level of Activity (Re. Raw materials 30,00,000, -40,00,000 190,000, +24,00,000 32,00,000 '96,00,000 '80,00,000 1,00,00,000 The policy of the company is to charge 25% on variable costs lo cover prof. Raw material is in short supply and the company wants to utlize its available supply of raw materials in an optimum manner. Planned operating capacity is £80%. The company has to execute a job as per details given below Raw materials Rs, 40,000 Direct wages : Rs. 30,000 ‘You are required to quote the price of the job in accordance with the policy of the company. 11, “Target costing forces an organization to ‘Manage Upstream’ during product planning and design strategy” explain the target costing methodology.PG - 712 * 12. Polatis, a company engaged in decision support system (DSS), is examining ‘the profitability and pricing policies of three of its recent engineering software packages viz., EE-46: package for electrical engineers, ME-83; package for mechanical engineers, and IE-17 : package for industrial engineers: Summary details on each package over their two-year ‘infancy-to-grave" product lives are as follows . Number of unite of ealos Package | Selling price Year 4 Year -2 E46 2500 2000 ‘8000 ME-83 3000 2000 3000 ‘Assume that no inventory remains on hand at the end of year 2. n the past two years, profitability has been mediocre, Polaris is particularly concemed with the increase in research and development costs. An analysis pointed out that for one of its most recent packages (viz., IE-17), major efforts has been made toreduce R and D costs. Praveen, the engineering software manager, collected the following if cycte revenue and cost information for EE-48, ME-83 and IE-17 packages.7. PG - 712 —— eas run non) | Meare no [IET7 fm wor vent] vacant vess| Vaal |rm|NSS ‘Sales revenue 5,000, 20,000 6,000 9,000 | 10,000 $000 Research and development cost | 7000] 0 | 450} 0 | 2 Design of product 1,100 100 _ "300 160 “Manufacturing: 1,050 1,050 1,430 oo | Distribution | = 360 500 3,250 a 3/880, a) Present a product life cycle income statement for each software package. © ‘Which package is the most profitable and which is the least profitable ? Ignore the time value of money. b) How do the three software packages different in their cost structure ?PG - 587 ll Semester M.F.A. Degree Examination, June/July 2014 (Semester Scheme) FINANCE AND ACCOUNTING Paper ~ 2.5 : Strategic Cost and Management Accounting Hours Max, Marks : 80 Time: SECTION-A (102220) Note: 1) Answer any ten of the following sub-questions in 3 to 4 lines. 2) Each subquestion carries 2 marks. 41. a) What do you mean by cost accounting ? ) Define the term cost criver. ©) Whats product design ? d) What do you mean by transfer prices ? @) Define cost plus pricing. 1) Whatis budgeting ? {) Define the concept of value chain. fh) State the merits of management accounting, @ _ i} What do you mean by activity based costing ? 1), Whatis product ? k) Define the concepts of target costing 1) Whatdo you mean by overheads ? SECTION-B (515) Note: 1) Answer any three questions. 2) Each question carries § marks 2, Whatis JIT ? State its managerial benefits, 3, Wiite an analytical note on TOM. Pro.PG = 587 2 VT a 4, Whatare the tools and techniques of cost management ? Explain, 5. Explain the usefulness of business process re-engineering. 6. What are phases in product life cycle ? Explain in brit. SECTION-C (2x15=30) Note: 1) Answer any two questions. 2) Each question carries 15 marks, 7. Explain the benefits and limitations of muttinational pricing market based transfer prices, 8 What's value chain analysis ? Explain its managerial benefits to business, 8. XYZLId,, is manufacturing two products A and B, using the same equipment and similar process. An extract of the production data for these products in one period is shown below Particulars A B Quantity produce: (units) 80007000 Direct labour hours p.u. 1 Zi ‘Machine hours p.u, A 1 Set ups in the period 40 40, ‘Orders handled in the period 6 0 Overheads costs Rs, Relating to machine activity 2,20,000 Relating to production run set-ups 20,000 Relating to handling of orders 45,000 2,85,000 You are required to calculate production overheads to be absorbed by one unitof ‘each of the products using the following costing methods. 1) Traditional costing approach using a direct labour hour rats to absorb overheads. 2) An ABC approach using suitable cost crvers to trace overheads to products.M0 + PG ~ 587 10. ABC Ltd., sells Ice cream cones in a variety of flavours. The followings are the data available in organisation (data relating to one week) Revenue (5000 cones @ Rs, 5 each) 25,000 Cost of ingredients Rs. 4,000 ‘Store attendant Rs. 6,000 Rent Rs. 7,000 17,000 Pretax income 8,000 ‘The manager estimates that, if she were to increase the price of the cones from Rs. 5t0 5.18 each, weekly volume would be cut to 4250 cones due to completion from competitors. You are requite to estimate the protit-maximizing price per cone. SECTION-D (115215) Note :1) Read the following case and answer to the questions given at the end of the case. 11, Company A’ manufactures calculators. i planned to introduce a new calculators modeled “AA’, itis expected to have life cycle of 3 years. According to market esearch, customers will be prepared to pay $ 110 per “AA”. The iollowing information is given about “AA. Particulars Year($)i_Year($)2_ Year ($)3. Unit manutactured and sold 7,000 90,000 15,000 R& Deosts 8,00,000 - - Marketing costs 41,00,000 0,000 20,000 Training costs 7,009,000 30,00,000 _15,00,000 Disposal costs - = 4,00,000 Questions: 1) Calculate cost per unit of “AA” and comment on the suggested price. 2) If, cost per unit of “AA” is higher than what the customers would be willing to pay ? Explain,PG - 831 Il Semester M.F.A. Degree Examination, July 2012 FINANCE AND ACCOUNTING Paper-2.5 : Strategic Cost and Management Accounting Time : 3 Hours Max, Marks : 80 SECTION-A (1052-20) ‘Answorany ten of the following sub-questions. Each question carries 2marks. 4. a) What do you mean by cost accounting ? Define the concept of cost plus pricing ©) Whatis value engineering ? ) Wiite a note on life cycle costing. 2 6) What is fixed cost ? £) What do you mean by value chain analysis ? 9) Write a note on cost drivers. h) Define the concept of product design. ')__ Whats business process re-engineering ? )-What are the merits of value analysis and value engineering ? k) Define concept of target costing 1). Define the concept of overheads. SECTION-B (5-15) Answerany three questions from the following. Each question carries ivemarks. 2. Strategic cost accounting is a too! for cost control. Comment. 8, What are the managerial benefits of activity base costing ? Explain. P10.PG — 831 2 Nc 4, The capacity usage ratio and the capacity utilization ratio in respect of a machine fora particular period (i.e. 2011, March) is 90% and 80% respectively. The total available working hours in the month of March, 2011 are 200 hours. The Idle-time card reveals as follows Waiting for material — 10 hours Waiting for tools —6 hours Break down 10 hours Report the idle time cost to the management, it hourly fixed costs of the machine amount to Rs, 4.25 and operator is paid Re. 0.75 per hour. 5. XYZ Engineering Factory consumed 50,000 units of a component per year. The ‘ordering, recelving and handling costs are Rs. 3 per order while the tracking costs are Rs. 12 per order. Further details are as follows; deterioration and obsolescence cost Re. 0.004 per unit per year; storage cost Rs. 1,000 per year for 50,000 units. Calculate the EOQ. 6. What are the ABC cost drivers and cost pools ? Explain, SECTION-C (2x15=30) Answer any two questions from the followings, each question carries 15 marks, 7. ABC organisation manufactures a product involving the assembly of some parts purchased and others worked from raw-materials. The plant has been operating at an even rate throughout the year on one-eight hours shift, producing 500 units per month, The cost for the past year as follows : Raw materials — Rs. 1,60,000 Purchased parts — Rs. 1,00,000 Direct wages — Rs. 3,00,000 Variable overheads — Rs. 70,000 Fixedoverheads — Rs. 1,20,000 7,50,000‘i 10. iM * PG - 831 At this point, the sales department wanted to know the minimum price to be quoted for an order of 3000 additional units to be produced and delivered at the rate of 250 units each month for the next twelve months. No additional selling and administration expenses will be incurred if, he order is accepted and the ‘management wants a minimum profits of 5% on the selling price. ‘Any additional raw materials purchase can be made at a saving of 5% of cost of such materials. Labour requirements above the present one shift can be secured ‘only atan increase of 10% aver present rate. Total variable overheads are expected to increase by 60% due to the increase in volume, and fixed production overheads will go up by Rs. 9,000 only. From the above information you are required to prepare statement showing details Of price calculating for the new orders. Whats the role of cost accounting in strategic planning ? Explain in deta ‘Write a analytical note on different elements of strategic cost management. ‘The relevant data relating to company are Particulars Products A B c Total Production and Sales (units) 60,000 40,000 16,000 = Raw material use in units “10 10 2 - Raw material costing Rs.50 Rs.40 Rs, 22 24,76,000 Direct labour hours 25 4 2 342,000 Machine hours 25 2 4 2,94,000 Direct Labour cost Rs.16 Rs.24 Rs. 12 - No. of production runs 6 “4 40 ~ No, of deliveries 18 6 40 a No, of receipts 6 140 880 1080 No. of production orders 20 20 50 1000PG ~ 831 4 Overheads : Setup Rs. 60,000 Machines Rs.15,20,000 Receiving Rs, 8,70,000 Packing Rs. 5,00,000 Engineering Rs. 7,468,000 ‘The company operates a JIT inventory policies and recieves each components: ‘once per production run. Required 1) Compute the product cost based on direct-labour-hours recovery rate of overheads, 2) Compute the products costs using ABC. SECTION—D (Compulsory) (tx15=15) ‘Analyse the folowing case property and answer the question given atthe end of the case 11. Most of the organization have viewed, JIT as a tool — a knight in shining armor which promises rescue from sluggish profits, poor quality, and productive inefficiency. tis often landed for its beneficial effects on employees morale and selfesteem. Yet JIT may also cause a company to struggle and may produce a 900d deal of frustration. In some cases, JIT appears to deliver less than its reputation seems to call for. Required From the above case, you are required to discuss limitations and problems that ‘companies may encounter when implementing a JIT system.OE "PG - 659 Il Semester M.F.A. Degree Examination, July/August 2011 (Semester Scheme) Finance and Accounts Paper — 2.5: STRATEGIC COST AND MANAGEMENT ACCOUNTING Time :3 Hours Max. Marks : 80 SECTION ~ A 1. Answer any ten of the following sub-questions. Each question carries two marks, (10x2=20) 8) Define committed fixed cost. ) What do you mean by cost driver ? ‘¢) What is Incremental cost ? 4) Define Activity Based Costing. ©) What do you mean by value engineering ? ) What is sunk cost ? 8) Define target costing. h) Define EO {) What is meant by cost plus pricing ? -D What do you mean by period cost ? ) Define transfer pricing, D Define TQM. SECTION = B ‘Answer any three questions which carries five marks each. Answer to theory question should not exceed one page. (Gx5=15) 2, What is cost analysis ? How its useful in decision making ? 3. In transfer pricing, what is common conflict between a division and a company asa whole ? pro,PG - 659 a 4, What is performance budgetting and what are its requisites ? ‘5, Following information relating toa type of raw-material is “Variable” ‘Aca demand 2,400 units Unitprice Rs, 2.40 Ordering cost per order Rs, 4.00 Storage cost 2%pa Interest rate 10% pa. Lead time Half month Calculate EOQ and total annual Inventory cost in respect of the particular raw materials. . 6. A housewife is looking at ways of producing domestic hot water and considers two possibilities - an electric immersion heater having an installation cost of Rs, 160 and estimated annual electrical charges of Rs. 200 and a gas boiler with ‘an installation cost of Rs. 760 with annual fuel bills of Rs. 80. Assuming yourself as a consultant to this cost - conscious - housewife, advise her suitably by comparing two systems, on the basis of (i) total expenditure and (i) present value over a 5 years period, Take interest at a 9 %, ‘What will be your recommendation if you consider both the equipments for a 8 years period ? SECTION ~ C Answer any two. Bach question carries 15 marks. Answer to theory question should not exceed 3 pages. (2x15=30) 7. What is life-cycle costing ? Explain the stages of product life cycle with suitable examples, 8, Whatare the areas in which activity based information is used for decision making ? 9, A company is organised in to two large divisions. Diyision ‘A’ produces a ‘component which is used by Division ‘B’ in making a final product. The final proxiuct is sold for Rs. 400 each. Division A has capacity to produce 2,000 ‘units and the entire quantity can be purchased by Division B. Division A informed that due to installation of new machines, its depreciation cost had gone up and hence wanted to increase the price ofthe component to be supplied to Division B10, tos, 220. Division B, however can buy the component from the outside market at Rs. 200 each, The variable costs of Division B in manufacturing the final product by using the component is Rs. 150 (excluding the component cost) Present statement indicating the position of each Divi whole taking each of the following situations separately. and the company as a 4) Tethere are no alternative used for the product facilites of ‘A’, will the company benefit if Division “B’ buys from outside supplies at Rs. 200 per component ? ii) TFinternal facilities of A are not otherwise idle and the alternative use of the facilities will give an annual cash operating saving of Rs. 30,000 to DivisionA, should Division B purchase the component from outside suppliers ? ii) If there ate no alternative used for the production facilities of Division A and the selling price for the component in the outside market drops by Rs. 15, should Division B purchase from outside suppliers ? iv) What transfer price would you fix for the component in each of the above circumstances ” Relevant data relating to a company are: Products Rr P Q Rs. Total Production and Sales (Units) | 60,000 | 40,000 | 16000 | Raw material usage in units | 10 | 10 | 22 Raw material cost Rs 50 | 40 | 22 | 24,7600 Direct labour hours 25 4 2 _ | 342,000 Machine hours 25 a 4 | 294000 Disect labour costs B16 | 24 2 : No. of production nuns 6 i [4 ol No. of delivers 18 6 0 4 No. of receipts co [| 140 [| sa | 1080 No, of production orders 30 [| 2 | 50 | 100 3 PG - 659me CUI Rs, 60,000 15,20,000, 8,70,000 5,00,000 746,000 ‘The company operates a JIT inventory policy and receives each components ‘once per production run. Required : ) Compute the product cost based on direct labour-hours recovery rate of overheads, ii) Compute the product cost using activity based costing SECTION ~D (1x15=15) Case compulsory 11, Many companies have viewed, JIT as a panacea - a knight in shining armor. Which promises rescue from sluggish profits, poor quality and productive inefficiency. 1is often lauded for its beneficial effects on employee morale and selfesteem, Yet, JIT may also cause a company to struggle and may produce a ‘good deal of frustration. In some cases, JIT appears to deliver less than its reputation seems to call for: Required : Discuss some of the limitations and problems that companies may encounter ‘when implementing a JIT system.PG -504 eo U 1 Semester M.F.A. Degree Examination, June/July 2010 (Semester Scheme) FINANCE AND ACCOUNTING Paper —2.5 : Strategic Cost and Management Accounting ‘Time :3 Hours Max. Marks : 80 SECTION ~ (10x2=20) 1. Answer any ten of the following sub-questions in 3 to 4 lines. Each sub-question carries two marks 4):Define cost control ‘bj What do you mean by strategic planning ? ©)e What is meant by product design ? 4) Define labour turnover. ©)eldentify areas of cost management in material. What are cost pools ? £) Define activity, bh)State the methods of pricing products '), What is transfer pricing ? DsDefine budgeting, ) Why do you think product life eycle is bell-shaped ? 1) What do you mean by primary activities in value chain analysis ? SECTION-B (xS=15) Answer any three questions, Hach question caries § marks. ‘Answer to theory questions should not exceed one page each. PF Peserbe various phases of product life cycle. 3 ik eos SS NG ian Pro.PG ~ 504 4..Explain different methods of transfer pricing, ‘5. What are cost drivers ? Identify various cost drivers in snanufacturing of sugar product. _ AC Ontdoor express isa large manufacturer of recreational equipment. Performance ofthe camping division is measured as an investment centre because the managers make all the deci about investments in operating equipment and space. Following is financial information for the camping provision : * Average operating assets — Rs. 20,00,000 Cuurrentliablites 500,000 Operating income —3,00,000 Camping division’s required rate of return is 12% average cost of capital is 9% and the tax rate is 30%, a) Caleulate the ROT ) Calculate the residual income ©) Calculate EVA. SECTION ~C Answer any two questions. Each question carries 18 marks, ‘but outdoor express’s weighted (2x15=30) 7. What are the benefits, costs and limitations of ABC and ABM ? 8, How is value chain analysis is used to improve operations ? Explain, 9. The Kurlon Ltd. manufactures a variety’ of hand-crafted bed frames. The company’s manufacturing activities and related data for the current year follow : Manufacturing Estimated Activity cost(Rs) Material handling —4,00,000 ‘Cutting 12,00,000 Assembly 30,00,000 Wood Staining —_13,20,000 Cost Driver used as allocation base No. of parts Machine hours Direct Labour Hours No, of frames staind a Estimated volume of cost driver 800,000 parts 40,000 hours 1,50,000 hours. (60,000 frames: ‘Sana PG ~ 504 ‘Two styles of bed frames were produced in July, a wood frame with fewer parts and a metal frame that requited no staining activities. Direct labour is paid Rs, 25 per hour. Their quantities, direct labour hours, direct material cost and other details are as follow : Units Direct] Machine No. of | Direct Labour] Produced] Material Hours | Parts Hours I. Rs) Sion aon ‘Wood Frames| 5,000 | 6,00,000 | 5,000 1,00,000 6,000 Metal Frames) 1,000 | 2,00,000 | soo 10,000 3,000 10. ‘Compute the ABC cost allocation rates and then calculate total manufacturing costs and unit costs of the wood and metal frames, Lucky Ld sells fee cream cones ina variety of flavours. Data fora reccat week appear here Revenue (1000 cones @ Rs. 1.75 each) 1,750 Cost of ingredients 640 Rent 500 Store attendant 600 1,740 Pretax income 10 ‘The mianager estimates that if she were to increase the price of cones from Rs. 1.75 each to Rs. 1.93 each, weekly volume would be cut to 850 cones due to competition from other nearby ice-cream shops. Estimate the profit-maximising price per cone.SECTION ~ D Case (Compulsory. Fancy Fleece developed a new outdoor wear fleece fabric that is both wind and ‘water resistant, but retains a soft and fuzzy feel. The research and development process was more expensive than fancy's managers anticipated, and the materials in the fabric are also more expensive anticipated, The managers believe that if Fancy prices the fleece to cover total costs, no one will buy it. The marketing department held several focus groups with manufacturers who produce and sell winter jacket and pants to determine an appropriate price. ‘The marketing department also surveyed customers who recently purchased fleece jackets to determine the amount of premium they would be willing to pay for a jacket that is both wind and water resistant: The marketing department concluded that the new fleece fabric would sell at a price that covers variable costs, but does not cover the total costs of production and development. You have been asked to help the managers decide whether to produce the fleece and how to price it if they do produce it Required a) What kind(s) of analysis would you perform for this decis b) Explain whether it would generally better for Fancy Fleece to use cost-based or market-based pricing, ©), Identify uncertainties about how much it wil cost to produce the fleece. Li asmany uncertainities as youcan, —* mn? <4) Explain why the managers of Fancy Fleece cannot be certain that they would be able to sell the polar fleece to cover variable costs.a PG -.546 2009 % “WL Semester M.F.A. Degree Examination, J (Semester Scheme) FINANCE AND ACCOUNTING 2.5 + Strategic Cost and.Management Accounting ‘Time + 3 Hols ‘Max. Marks:: 80 . . SECTION ~ A 1 Answer any ten of the following sub-questions, Bach sub-questionearres"two vrs: (10%2=20) f) Define cost management. « 1b) What is strategic planning ? ©) What do you mean by value analysis? a) What is BPR 9 > ©) Whit is a cost Driver 1) What is targot pri 5) What is bh) What is meant by JT #~ 2? ’ i oflie cycle costing F 4) State the tools of cost managemeniL IY What is budyting, 9 1) State the circumstances under whieh transfer pricing is adopt 1 Suite the teatitional methoel of absorption sf ewe SECTION ~ RB three questions which euros Fivediatkizeael shes tthe eesti should not,exceed one page. (xS-45) 2. Bring out the role of cost accountant in strategic planninee~ 3. Stat'the isues involved in managing labour cost Pro.PG ~ 546 2 ‘Hue 4. Differentinte between value unalysis and value engineefing, State the distinction between cost control and cost reduction, N 5+ From the following cost data given by a company determine the selling pric. per Mout to yiekd 20% retnen on eapitah Direot wwitertaly les, 1120, diseet ttagen tes, 3.00 aid variable overl ude Rs, 0.80 per unit, A s Factory overheads Rs. 6,60,000 pr : ned selling anu Adinn, overhead i, 3,604,000 pa, Annual sites 4,00,000 units Capital employed in fixed assets Rs: 9,60,000 ; Capital employed in current assets 50% of sales 6: Mdentify the vist drivers for the following main activities of a firm 4) Customer order proces ) Material planning acquisition ©) Maintenance F d) Prodi . SECTION ~ C Mewes any two questi. Kael question cates tS mihi, Answer 0 thoury question should not exceed 3 pages : » Qx15=30) : | 7 Ruwnerate the ways by which the Gompetiive advantages is achieved ihro¥gh ABC system, : 5: Explain the factors which influence in determining prices under different spproaches, ; Division Z in a profit centro, which produces four products ~ A, B, C and D. ‘Hach products is sold in the extemal market also, Data forthe period is a follows, ae Bs Market price per unit (Rs.) 150 146 140 130 ‘Variable cost of Production perunit (Rs.) 130° 100 90 85 , Labour Hours Required per unit a 4 2Product can be transferred to division ¥,,but the maximum quantity that might bc required for transfer is 2,500 units of D. ‘The maximum sale jn the external market are A — 2800 units, B ~ 2,500 units CC ~ 2,300, units, D ~ 1600 units. Division Y can purchase the same product at a slightly cheaper price of Rs. 125 por unit instead of receiving transfers of product D from division Z, : [What shbald be tanafer price foreach unit for 2,500 units of D, if une total labour hours available in division 2. are : 4) 20,000 hours ? 4 30,000 hrs. ? Currently AB CLtd,, makes and sells four products and whose details are given ‘below for one period. ‘| Products Ate Oe oI vipat in, its 20100 80120 Cost per unit Ry RE ORS Directimaterials 40° 5030.60 Direct Labour Ze Be Nein aad Machiiehours (pecuni). = 43 YN "The four products are similar and one usually produced in production vine OF 20 units and sold in batches of 10 units. absorbed by using a n.achine hour and the total of the prexluetion overhead for he pioxletions ovestyend iy earefally the period has been analysed as Follows, | Rs. Machine Department cost 10,430 Set yp costs $5,250 Stores receiving, Inspection quality control 2,100. Materials handling and dispatch 2 4,620 wna * : PG ~ 546516 4 You hve ascertained that the ‘cost drivers’ tobe use ‘as 4s listed below for the ‘everhead costs showin Cost Cost Driver . Set up easts No. of produetion runs Stores receiving, Requisitions suised a Inspection Quality control Number of production runs Maoists handling, aul Dispel Onlerrexeeutod The mumber of orders raised on the stores was 20 for cach prochiet ind the number al anlend eseeunl waa 2, ened oniee batel yf 10 of w Product You are required te, 4) Caleulate the total costs df each proctuct if at Overhead costs are absor'ved on machine hour basis, STCTION = ao . Case (Compulsory) (1e15=15) A Company is considering a cost saving project: This involves purchasing a Re. 1000 ant 7.000 which witl sulin annual stvinge oe ‘wage costs of Rs. 1,000 ind an material costs of Rs, 400, ‘he fellow frecusts swe andl ofthe rales of inflation etch yeur forthe next $ Years, Wages costs 10% materil-costs 56 general price, 6 ‘The cost of capital of tne company, i monetary terms ts 1556, Evaluate the project, assuming tat the machine has a life of § ‘years and no sctap value. : \Wm no iM JP = 73¢ ny dune 2008 ; ‘I Semester M.A. Degree Exan a (Semester Scheme). FINANCE AND ACCOUNTING : 2.8 : Strategic Cost and Management Accounting Time ; 3 Hours Max. Marks : 80 -CTION = A 1. Answer any ten ofthe following sib-questions in 3 to. Fines, Bach sih-question carries two ark (se pm Strategic cost mansigement ? > State the difference between cost management ne neumageanent comnts 2 What is wale analysis ? 2) What is COM? ©) Whats BPR? + 1). What do you mean by cost pas pricing ? 8) Define target costing ; AY What do’ you understand! hy life excte costing 9 4). Stat the meaning of SIT. J * han ste yew mica ty proatiet profitatigy = 1) What is product life eycte 2 }) What do yoirinean by transfer pricing? - SECTION. B {inswerany three questions which eary live marks ench. Answer theury questions should not exceed one page each, (e5=15) 2. Explain the role of strategie cost accounting in manageniemt dont 3. Explain the managetidl uses of Business Process re-engincering.ater to.00 Direct wages 4.00 Variance overheads 1.99 ‘ [Sel ictoiy uveriead Rs, 550,090 : fixed ling and stitution overheat Rs, 3,00,000 “nual sales 400,000 Unig + Capital employe in taxed assets 10,00,000 fs Snsl employed in current esseis 50% ap sales, vstinine the Selling price per unit to yielg 20% retam on capital employed, SECTION ~ © Answer any tr Fem th ft con dat divers apn hoy 2 ong ost deers 2. TGS ths proces i demi pr Prices under tke vations sSoromshes of pricing he: Timex Gadgets Ld, taIgteIMS travel clocks and vatehes, MW currently allocaten overheat vote wala irect labour hours; but the controller hag Activity Level ‘Travel Clocks Watches: Activity Costariver — Costs Re, ~ : Product setup No, ofsetips syp09 10 15 Mortal tndiing No. tyme ‘15050 Tees. Ap and requisition ; Vy Prokeging aid No. of wig | ‘i 45000 45000 Shipping shipped ‘Total overhead:‘iain : es ' © Required : ® Compote the amount of over head to be allocate! ro ‘cach product under activity based costing, 5) Compute the amount of overhead ty be allocated 10 cach rodluct using direct Jnbour hours a5 the base. Assithe that the meni ef ditvet tobour hours A000 ar rset es each unit i 0.5 per ieasel clack snk ta per wateb and 45000 travel elocks and 75000 watches were praetor © Shull Uwe company follow te controllers recy 19 Att sain te lowing one stent Pes. eee PEALE fects a eduction in ses price may be ear ned 11.12.2000 It ts Sales (unis 2,00,000) y 18.00.00 Variable ete too Fixed costs 5,009,000 15,00,000 Profit Required : 4 HOw mich extm volume must be sole in 2001 to yiet ain income equat wo TERN Samed fn 2000 At deercunes ot 45, yo, 9 selling: prices ‘spectively become necessary ? ssively You wen saves,Ir -76 : a (tx get of selling factures at @ price which would fetch a © sects eaployed by it, The Following Fires are ere ‘ Fixed overneau 4,00,0r9 Variable east (pee unit) 1.00 Debi 2.00,090 Stocks 6,00,000 Plot aut other assets + 4,00,000 ' However, the marketing Deptt, of the.company findout by'a survey hat the 10000 snes toet Of COM 21 the market an take atthe proposed biice is only 140000 units, Fovwnately Division B. is willing to purchase the balance 6 ; imager of Division A is willing to sell to Division B at a concessidnal price of Ri 4 Per unit But the manager of Division B is-ready to perches at Rs. 2.25 Only er unit ag he Feels that it canbe made in the division lef wt at price. Rather'than sell to Division B; spe sctivily to of his Division to manhfactuie and sale of 140,000 Units only. By‘Time : 8 Hones PS-: U Semester MFA. Degree Examination, May/June 2007 _ (Seméster Scheme) COMMERCE ‘trategic Cost and Management Acconnting : Max, Marks SECTION ~ {Answer any ten of the following sub-questions in 3 to 4 lines, Bach sui-question caries tid marks : 4) Define the term strategy. PD What ig Stayt: Management Acc atin ©) Whats strategie planning 7 i) What is meant By State Chat Avetys ©) What do you mean by competetive auvanta "0 What is cost control ? " g) When is transter pricing adopted? "hy What isa cost pool ? : *)) What are costs whieh are prominent at growih stage of a rovuet J State tie essence of JIT costing, - ©) What is meant by “1D: State any two ben uc engineering 2 of ABC, SECTION - Allswer-any three questions. Bach question eatcs five marks, A theéry question should not exceed cite page wer 10 each 2. Differentiate between cost pools and cost drivers. 3. Stite the role of cust accovnting in strategic ng and mangement cont SCE OF Cont in the Tele ye he aa fyealft company bas the’ capacity of Product O eet. Nhe dei ice and it has Brice ihe demand is Ret COSt At Bull opacity if pratit ung iH is taken SRCTION ~ ¢: Answer 70 Wom the totlowing (2xtsm3 the Use oF NLS 7. How ARE syn He RUC latey 2 Wn tn, . 8. Ennmerate the main Oblectives of taster pric Brivtly explain the ine of determining tanster pricey, 2. Describe the elements af costs ‘heh affect the Suatepie Cost Man ements stn Scale unit tis @ capacity to inake 19.000 units ofa produc “the actu Contin 2001 was piven below s i ateetmnaterals RS. 50 per unit, Ditect labour Rs. 12 per anit, Variabh: overheads RS 4.50 per unit, Fixed factory overhead Rs, 25,000, : A wage agreements entered into Where the wage will be liniged to an index, pe Habour rate presently comprises °F 50% basic pay and balanes as DA, ‘The formula is to link the existing D.A. to price index. {0 "The sate is estimated 10 touet syep capacity, it) The average fixed net asses ill be Rs. 2,25,000 and working ‘capital would be 25% of value of sales, %™) Company expects a retum of 159% on Capital employed,rs PS 578. price indices for the base period 2004 and for 2005 are as follows :* 2004 2005 Coit cf living index for D.A. 420925 hype: 450. 600 {:cstom 400 480 ‘Pia cnaterial used is 60% copper and 40% alumina. sine the price at which product is to be sold in 2005, SECTION 1D (Case) (x15=15) ik Lid, makes prodiict, which hus aban aeeena wes at hele naterials Rs. 50.00, Diveet wages Rs. 27.50 and Waite production anal budget farther indicates” ontgat in waits $0,000, . Re ised overhead : Production» 50,00,000 Administration” 30,00,000 1 Marketing 25,00,000 . 1,05,00.000 ‘he company’s management desires roach better vesulls: than propected the following proposals for improved performance to be eonsivleretl: ) Rednce the selling price by 10% with the prospect uf production and sale increasing by 25%. The fixed production overlicaal will increase by Rs, 2,50,000 and fixer marketing overhead by Rs. 1.25,000. 4) Increase the selling price by W) percent Anu inervase, a lvextisiny: expenelitine , fiom the present outlay of Ws. 5,00,000 to Rs. 25,00,000. Sales will po up to J 96,000 units. Fixed production overhead will he-up by Rs. 125,000 and snarketing. overhead by Rs, 1,00,000, OA profit 6t Rs. 30,00,000 is desited. A 10 percent increase in sales ean be ‘achieved by increasing adverlisement expenditure by Re. 18.09,000. "The fixed production overhead will x0 up Ly Is 125.000 and iyuketing vernon by Rs, 85,000. What is the selling tice required for achieving the desired = profit ? uf v wi.sa PS - 600 I Semester. MFA Examination, Jume 2006 (Semester Scheme) COMMERCE Paper 2.5 : Strategic Cost and Management Accounting ‘Time : 3 Hours Max. Marks :'80 SECTION-A 1. Answer any ten ofthe following sub-questions in3 tod lines. Each sub-question carries two marks . (1042220) <9) What do you understand by strategic planning ? D) What do you understand by strategic cost accounting ? oF State the meaning of product design. <8} Whatis value analysis 22> ‘ey What is TOM % State the meaning of BPR. ef What do you understand by value engineering 2 Wy State the meaning of averhead.e- Ai What is cost plus pricing @_— IY State the meaning of target costing. <4) What is produet life eyele 2 J Wha‘ do you understand by value chain 2. SECTION - B Answerany three questions, which, carry five markseach. Answers to theory questions should not exceed one page each Bx5=15) 2. Explain the role of cust accounting, in management control. 3. Describe the characteristics aid steps in implementation of ABC. C——~ 4. Explain the meaning and objectives of IIT. =PG ~ 697 4 SECTION — D (Compulsory) (Casednalysis) [evergreen Ld pastes policy of penning each of ts dvisiens io operme essentially ‘san independent vis, Divisional Managers af eso detains their own sources of supply at gatiis van prices The dese iagioamanutactoring division are given below: nde anotacared Partita in Division A x pe |e Eaten Mate pce per wns) | as | as | a0 Variable cst yw (Rt) a |ulal- Labour Hest ale dae ach producthasenternal sparket. The maximum externa sles ae Prodi x 800 units Proc: 500 unis Prada :300 waits Product Y canbe tasted 0 anither manufacturing vision viz, B but the maxima qarty th tight be rire for transter i300 units of Y. Instead of receiving transfer of product ¥ fom Division A, Division D could buy similar protuctindhe open market ata pref Rs. 45 pr anit, ‘Assume that Division ‘A is protic ceotee Required: 1 What umudr price do wo svagest foreach unit product tobe transferred from. Divisen Ato Division if ol labour hows aval a Division "Aare 3800 7 ‘Will youranewer change; if there are 5600 hours avalible in Division ‘A?‘The working capital requiremient of product M based on a target value of output of 10QOuRits per Month is estimated at Rs. 1,24,000 pa ( Rejnited : i 1) Indicate the bottom line selling price of product M assuming that = 4) Price is adequate to ensiré contribution equivalent t 30% on investment made. ii) The product is a new product about tobe introduced in the marker )_Calpufate the selling price in a situation where product is well established in i tiv! market so a3 to field retom of 18% on investi. 10, A coiipany produces four products ~ P, Q, 2 and S, The data relating to prod ction activity are as unde: ; a a A product’ OMt% of Material Dirodlbour Machine Direct labour a Pritn. coxVonit —— hoursianit © lievinit vostionit P3000 10 1 S030 6 Qe IMov ww \ oso “ kta n 4} nav Sani u 4 00 Produetion overheads un under i ') Overheads applicable to machine oniented activity Rs. 149,700 ii) Overhents estating 4 otto ving materia es, 7.68i° iif) Setup costs Rs. 17.400 iv) Administration owverhenls for spare pants Ke 9a.380 0 ati, cots f I. Gagaesotay ‘The Following, Farther information dave bern competed Penduel Necof Neo anatesiat Nuvvet spans set ups orders parts Br 3 3 6 Qa. B 2 15 R 5 3 9 3 s 2A n 36 nPS 600 + Required y mol 1 Select a sy the cost per in 2) Using the cinreps of activity base costing, ‘compute the f of each department. be cost drives tl neh item of overhead expense gad calculate ot cust driv, Ory epst per unit OND se Compulsory. 1s QA smi stow post tc be teptaved atleast every four ‘cary “Re cisesincura in runing the machingaeegnting tite roe a Purchase price Maintenance Kepairs [Net teatisable vane Faure replacement will be indentcal machines with the same costs. Reventie Thee Eh the ape of the machine. Assume thers in nointngee nd igivore ta, he east of enpital is 15%, Determiie the optinans replacement eyele. Present value factors @ 15% for years 1,2, 3, and 4 aré : . Years" BN hetor i rannatty : 1 08696 0.8606 ; 2 07561 ; 1.6257 a 4 0.6575 2.2832, F 4 osns 28550:M Semester MEA Exar nation, June 2006 (Semester Scheme) COMMERCE 1, Paper 2.5: Strategic Cost and Management Accounting ‘Time : 3 Hours Max. Mairks : 80 SECTION — A. 1. Ansiver any ten ofthe following sub.questionsih3 to 4 lines. Kach sub-question carries two marks. A (10x2=20) ©) What do you understand by strategic jianning >) What do you understand by strategic cust accountng > 6), State the meaning of product design 8) Wht is vate eh) What is TOM 0 lysis? ee fhe meanings ot patt, 8) “What do you understand by vane enginee ring 4) Styte the meaning of ovetheie 8) Wats cost—plus pricing ? D State the meaning of target costing. 1) What is product tite cycle 2 1 What do you understand by valieehnin 9 SECTION ~ RB Answerany three questions, which cary five markseach, Answer to theory questions Shouk! not exceed one page each, q “"OxSa19) 2. Explain dhe wate of east accountin, etent eontiol, 3. Neseribve, th and steps in implementation of tec 4 Explain the menning and objectives 61 sr} n40,con 21 5 A company has furnished the followin 3 Rs. Direct materials 11.20 Direct wages 3.00 i Variable aver ieint oxo ! ixed factory overheads Rs. 6,60,000 p.a. rad selling and administration overhead 3,60,000 pia. Anaual sae 4,00,000 units Capital employed in fixed assets Rs. 9,00,000 ) Capital employed in eurcent assets 5C°% of sales, Determine the selling price per init .o yield 39% etuen on capital. emstoyed & Describe the strategic cost managment 'Ssues involved in various elements of ort. " c Oxt Avnover any t90 Thome the follawing cj iblim bow the se: it superior to trudtongl method of overhead absbrprion & trefly describe the various apprsaetes ford termining: the prices of prexincis, % A chpony mwtictates proxlict Min tines {0 other prouuets by, using the Sv opts A andl 1. Tie cost daus ate as unde Direct mveriad @ RS. 6 per ky used in Dep. A He. 2-0 per Ry added i Wey, 1 ‘ours @ Rs. 4 per our in Dept, A Showes @ Rs. 3 per hour in Dept R Liirwet tabnie “bea ha Basis ovetnead recovery Par nips of rect Per difet labour imaerat P hour : » Reon it @ 90% of Paci" ——__bour pacity Vaviabte aso 2.00 6 Hse | 220 $00: Deprsin componnt of fea a aa Other leven data: : | Net plant and équipmnt value” 70,9000 1.20,000 ida syncs ian per nwa 0,000 41,000 i ae es a |PS ~ 765 28). AlSemester MRA, Examination, May/June 2005 ¥ | (2002-03 Scheme) : : COMMERCE *. . 2.5:Strategic Cost and Management Accounting ‘Time: 3 Hours ‘Max. Marks: 80 SRETION-A. , (2x10 = 20) 1. Answor any tem ofthe following sub-questions in 3 lines. Rach sulmdvestion ‘atest marks, . 8) Define Strtegic Management Accounting, b) What is Swategié Coss? ©” ©) Mow east driver ie ditenene tran ‘&) What is ABM ? ©) What is meane by Kaizan costing ? 1D What is Back Mush accounting ? 2) State the essence of FOM. hy What is DPR? i) State the object of value analyis 4) What iste philosophy of IT 2, 1) State the fadiional metals head alresin 1) Define value enginieringe cea Q + Answer any three questions, which carry lve inacks exe, Answer to tony ‘question should not exces! one pape ws 515) fr , «2, Distinguish between cost management and cost aevomutny }. Briefly state the characteristics of product ife cycle, : 4; State the benefits from adopting ARC system. , Bro.705 sedpany,X 8 ae to tivsons X dc iv dnly ¥ toute ine Ys ph The whore Quantity Costs to Revenue of Y (nits> ier dedueting own variable: Re Rs, 100° + 159 a 300 00 md 400 suv sv Wa 400 400 y ID Ls son 510 a0 You are ruil to ealeulite the appropriate transter price per unit between division X and ¥ ane! how many units should be produced, 6, Being, out the mnniagetial sc of ie eyele costing. SCriON (e153) Answer amy tro questions. Answe (0 1 theory question sivuld notexeeed 3 Danes. Faely question caries 1S mks. 2. How activity vise a! ADC in ‘a eusting sysenn suppons compara strateyy 2 Bring oak the ‘pany, Ive in ifr 8 Whats prosact life-eyele 7 Rapin tbe eests ie stage ot chine, whieh has just boken down. Last year this machine costed Rs: 20,000 ‘0 run and maintain, These costs have boen ineteasing in real terms in recent oats wit he age of the machine. A further useful ife ofS years expected, if immediate repairs of Rs, 19,000 are carried out, f the machine is not repaired it can be sold imme disposal) : i Alternatively, the company can buy n new machine for Re. 49,000 with ai ‘after providing depreciation on expected life of 10 years with no salvage c straight line basis. inthis case, ruining and maintenance costs will reduce to es, 14,000 ench yer and are n6t expected to Hnerease much in wel,ierns for {v years at least. The company segard a normal tum of 10% pa. aftertax as ‘8 minimum reqairement on any new investment. Considering capital budgeting Iechniques, which nltemative will you choose ? Take corporis tax ale at of 30% ul assume that depreeagiow on stnigt “hve buss Will be Aeeepted For ‘ fax purposes also. Given eave presse vale of Re, I pa at 10% fo 5 jes RS. 2791 and 10 year Re 6.148‘ovethend costs to products based on 350% of direct labour cost. The company binjuptdocided to use ADC system that rons indirect costs in proshies breed tes as indjcated below: Aelivity —. Annual ebst Cost Product cost Aariver quantity Rs. duiver contention Labour Rs. 3.00,000 30,000 Rs. 10.000 stachining 20000 brs 5.00007 0m is Setup: 10000 hrs 1,00,000 “100 hrs. Yroducton order 2000-orders 200,000. * 12 ones Mail ending" 1000 equisiions 209005 regions Pans ddministrtion 12000 parts 4,80,000 18 pans ‘You are-required to compare he annual casts of the product using hoth the {ridtional volume based and the nev ABC sem, ™ SECTION, (b Goss {omputsory) Or fet Pistons Li. penis GOOD pistons per ania fr its jeep Poet Mans La Tho autres fret Mere ae ThE variable cost per Piston in Rs, 189. The aml ised vos of Heaea Ti 1H i RS. 15 las and i is curently operating at 603% capo he cope Hesites ty sexy fr aw exp engi ti 3089 te tw "ype itis eurrently marti Uilisation and ave lasses. turing. ‘The company's aim i ananoee rape ‘You bave to take note of the following benefits thit will Transnetion, while determining the FOI pace 0 be aunt 3 Export incentive by way of ash asin 1106 of FOB value expovs Grimbureement ef excise of manufacturing input by way of 54s. drawback Of duty of £O.B. value of exports 119 Eoiveren of import tence tothe extent of 4h of HOM wee expr The imporvlicence cao either be sol a a promis of WWE or nee te iinet Import certain ecieal alo componcns that wit yiel 4 30% Profit on cost, ai ert 9 the expat ‘Recommend the base ming price tht the company should ae i ser \ebrbak-even, assuming 1) it sells the import icone in the market 7 jHimports componcatsogsinst the Fence wl ss them fr pota ao