a)      Calculate the amount of depreciation for 4 years as per  Companies Act and Income Tax Act (Assuming that there is no additional depreciation)

b)     If a new machinery worth Rs. 5,00,000 was purchased on 4^th October 2013, calculate depreciation as per the Companies and IT Act.

c)      If old machinery is sold for Rs. 15,00,000 on 10^th January 2013, calculate capital gain as per the Companies Act and the IT Act. All calculations to be done for PY 13-14.

·         Estimate their respective break even quantity

·         The margin of safety in units and value

·         The revised break even if the overall profit after tax estimated by the company is 20%

1. I had purchased & 20000 worth of shares at Rs. 125 per share from the Indian Market (1& = Rs. 42) on 1^st January.  I plan to sell 80% of the shares on 31^st December at Rs. 150 per share.  The expected market value is 1$ = Rs. 45/-  The cost of capital is 10% per annum

Calculate the following

·         What is the purchase price in Rupees

·         What is the total sale in dollar?

·         What is the net profit/loss incurred in dollar?

·         If we use cost of capital 10% what is the present value of selling price in Rupees.

1. Calculate EOQ, EOQ if there is 10% discount on material cost if we buy 500 units at a time

·         Annual demand 600 units

·         Ordering cost Rs. 400

·         Holding cost 40%

·         Cost per unit of raw material Rs. 15

1.  A company is considering the pushing up of its sales by extending credit facilities to the following categories of customers.

Category a: Customers with a 10% risk of non payment

Category b: Customers with a 30% risk of non payment

·         The incremental sales expected in case of category (a) are Rs. 40000 while in case of category (b) Rs 50000

·         The cost of production and selling costs are 60% of sales while the collection costs amount to 5% of sales in case of category (a) and 10% in case of category (b)

·         You are required to advise the firm about extending credit facilities to each of the above categories of customers.

Total production overhead recovered by the cost accounting system is analyzed under the following headings:

(Rs)

These overhead costs are absorbed by products on a machine hour rate Rs. 4.80 per hour giving an overhead cost per product of:

A=Rs1.20, B=Rs.1.20, C=Rs.4.80, D=Rs.7.20

However, investigation into the production overhead activities for the period reveals the following totals:

You are required:

(i)                 To compute an overhead cost per product using Activity based costing, tracing overheads to production units by means of cost drivers

(ii)              To comment briefly on the differences disclosed between overheads traced by the present system and those traced by Activity based costing.

You are required to present comparative profit statements for each month using:

(a)   Absorption costing (b) Marginal costing

The per unit production cost/sales data are:

Variable factory overhead is 100% of direct labour cost for both products.

Selling price (Rs.)          75               90

Labour rate is 2 per hour

Common fixed overhead for both products Rs. 10,000

You are required to –

(i)                 Prepare a marginal cost statement for the two products; and

(ii)              Evaluate the options and identify the most profitable sales-mix.

(Rs. ‘000)

Credit terms are

• Sales/debtors 10% sales are on cash, 50% of the credit sales are collected next month and the balance in the following month:
• Creditors:

Materials 2 months

Wages ¼ month

Overheads ½ month

• Cash and bank balance on 1^st April is expected to be Rs. 6000
• Plant and machinery will be installed in February at a cost of RS. 96000.  The monthly installment of Rs. 2000 is payable from April onward
• Dividend @5% on preference share capital of Rs. 200000 will be paid on 1^st June
• Advance to be received for sale of vehicles Rs. 9000 in June
• Dividends from investments amounting to Rs. 1000 are expected to be received in June
• Income tax advance to be paid in June – Rs. 2000

• Day 1: Owner contributed Rs. 20000 and borrowed Rs. 10000
• Day 2: The store purchased and received merchandise for inventory for Rs. 5000 agreeing to pay within 30 days
• Day 3:  Inventory costing Rs. 1500 was sold for Rs. 2200 which was received in cash
• Day 4: inventory costing Rs. 1700 was sold for Rs. 2600 the customers agreeing to pay Rs. 2600 in 40 days
• Day 5:  The store purchased a one year fire insurance policy for Rs 1200 by paying cash
• Day 6: the store purchased two plots of land of equal size for a total worth of Rs. 240000.  It paid Rs. 10000 in cash and gave a 10 year mortgage bond for Rs. 230000
• Day 7:  The store sold one of the t2wo plots of land for Rs. 120000.  It received Rs. 5000 in cash and in addition the buyer assumed Rs. 115000 of the mortgage that is Music Mart Inc, became no longer responsible for this behalf
• Day 8:  business received a bonafide offer of Rs. 20000 for the business
• Day 9: Ben withdrew Rs. 1000 cash from the stores bank account for his personal use.
• Day 10: Ben took merchandise costing Rs. 750 from the store’s bank account for his personal use
• Day 12 Ben learned that the individual who purchased the land above subsequently sold it for Rs. 140000.  The plot still owned by Ben merchant was identical in value with this other plot.

Make assumptions if necessary.