1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

End Semester Examination – APRIL 2014

B.Com – VI Semester

CORPROATE KNOWLEDGE INTEGRATION

Time: 3 Hours                                                                                                             Max. Marks: 100

 

 

Answer Question No. 1 which is compulsory and any other four questions from the remaining: Each carries 20 Marks.                           (5×20=100)

 

1. SJCC is considering the acquisition of solar energy equipment to be set up in campus for Rs. 20,00,000. It will have a useful life of 4 years. The same can be sold at the end of the fourth year for Rs. 5,00,000. The depreciation rate is 25% as per the Block Asset method. The tax rate is 30%. Discounting rate is 12% per annum.

There are two options available to the Management.

1. It can be financed either with a 4 year term loan@14% interest repayable

in equal annual instalments OR

1. Taking the equipment on lease paying Rs. 5,50,000 p.a

You are  required to help the management in making the right decision based on financial implications. Support your decision with required calculations.

 

2. The Entrepreneur cell of SJCC is planning to make fruit punch during summer examination time for final year students at the selling price of Rs. 15 per cup. One KG of mixed fruits costs Rs. 40.. The Normal wastage per KG is 400 gms. It is estimated that on an average 200 cups of fruit punch can be sold everyday and only for 45 days in March & April together. For very KG of fruit pulp, milk and sugar are added to the extent of 200 gms each. Milk costs Rs. 0.25 per cup. Every cup contains 200 grams of fruit punch. One Kg of sugar costs Rs. 35.

You are required to :

1. How many cups of fruit punch can be produced if they buy 25 kg basket of mixed fruits.?
2. If 200 cups of fruit punch is to be supplied how many Kgs of Fruits to be purchased?
3. If rent of Rs. 25,000 for 45 days is to paid to the canteen how many cups must be sold to break even?
4. If the cell expects a profit of Rs. 40,000 for 45 days how many cups to be sold per day?
5. If fruits are purchased for Rs. 30 per Kg and fixed cost is Rs. 15,000 and expected profits is Rs. 30,000 what should be the minimum price per cup?

 

3. A) Reliance Jewels has to decide on a particular type of exclusive diamond sets to be ordered prior to Diwali. The order has to be placed in advance only once. The cost of each diamond set is $ 6,000. Which can be sold at a price of $ 9,000 per unit? Unsold units after Diwali will be sold at a price of $ 3000 per unit abroad. Demands that cannot be fulfilled  due to stock shortage incur a goodwill loss estimated $4000 per unit. Inventory carrying cost is 15% of the cost incurred. The demand is subject to random fluctuation as per pattern indicated below. Determine the optimal number of diamond sets that reliance Jewels should order in advance.

Demand units	3	4	5	6	7	8
Probability	.1	.2	.3	.2	.1	.1

 

15. B) Annual demand 600 units, ordering cost Rs. 400, Holding costs-40%, cost per unit of raw material Rs. 15. Calculate EOQ, Annual cost for inventory. Also calculate total cost if there is 10% discount on material cost if we buy 500 units at a time.

 

4. Prepare daily balance sheet of Samson from the following.
5. On1^st Capital contributed Rs. 20,000 by the owner and borrowed from bank Rs.10,000
6. On 2^nd Purchases Rs. 2,200 payable after 30 days
7. On 3^rd Inventory costing Rs. 1,500 sold for Rs. 2,200 for cash
8. On 10^th Inventory costing Rs. 1,700 sold for Rs. 2,600 payable within 40 days.
9. On 11^th Fire insurance policy taken for goods for one year paid by cash.
10. On 20^th Purchased two plots of land of equal size for Rs. 2,40,000 by paying cash Rs. 10,000 and gave a 10-year mortgage bond for Rs. 2,30,000.
11. On 25^th Sold one of the two plots of land for Rs. 1,20,000 . Received cash

Rs. 5,000and in addition the buyer assumed Rs. 1.15.000 of the mortgage. i.e he became no longer responsible for his behalf.

1. On 26^th Business received an offer of Rs. 20,000 for the business.
2. On 27^th Withdrew Rs. 1,000 cash from bank for personal use
3. On 28^th Withdrew goods costing Rs. 750 for personal use.
4. On 29^th It is learned that the individual who purchased the land subsequently sold for Rs. 1,40,000. The value of unsold land has similar value.

 

5. Jet airways is planning to begin a new fleet of Domestic flights. The following information with regard to its proposed operations is provided.

PARICULARS	BUSINESS CLASS	EXONOMY CLASS
Revenues	81,840,000	536,176,000
Total available seats	6200
Average utilisation rate	60%
Average variable cost per seat	14960
Fixed costs	225,304,576
Depreciation	9,681,056
Total Investment	343,237,440

 

They require you to estimate the following for the Co.

1. The Breakeven point in terms of seats
2. The Cash Break even in terms of seats
3. The Break Even seats to target a post tax return of 6% on investments if tax rate is 40%.

 

6) Progen BPO has a capacity to process 50,000 accounts per month because of liquidation of one of the European clients the company has excess capacity. For the next quarter current monthly accounts processes is expected to be 35,000 accounts at a selling price of 4 pounds per account. The expected cost and revenues for the next month at an activity level of 35,000 accounts are as follows

 

Particulars	Pounds	Pounds per accounts
Direct labour	42,000	1.2
Variable processing overheads	35,000	1.0
Processing non variable overheads	28,000	0.8
Marketing costs	10,500	0.3
Total costs	1,15,500	3.3
Sales (Collection)	1,40,000	4.0
Profit	24,500	0.7

 

2. a) Another European client has asked his 3,000 accounts to be processed every month for 3 months at a price of 2.3 pounds per account. Do you advice the company to go for this proposal?
3. b) The existing labour force is not reduced but as per labour agreements minimum 3 months notice has to be given. The company feels that the jerk is a temporary phenomenon. Do you advice the company to go for 2 pounds?
4. c) If upsurge is going to be permanent the future sales will be 35,000 accounts for next one year. How much would be the price advisable to accept this offer?
5. d) The demand will remain for 35,000 accounts for the next one year and the permanent employees will be sent out after 3 months. What would be the best price to accept?
6. e) If the labourers are contract labourers do you accept to process at 2 pounds per account?

 

7) A company manufactures specialized equipments. Direct labour required to make

The first equipment is 2000 hours. Learning curve is 80%.Direct labour cost is Rs. 40 per hour. Direct material needed for one equipment is Rs. 7200. Fixed overheads are Rs. 32,000.

Required:

• Using the learning curve concept calculate the expected average unit cost of making

1. One extra equipment.
2. First 8 equipments.
3. After manufacturing 8 equipments, if a repeat order for manufacture of 8 equipments is received. What lowest price can be quoted for the repeat order?

 

 

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