St. Joseph’s College of Commerce B.Com. 2013 II Sem Corporate Knowledge Integration Question Paper PDF Download

  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH/APRIL 2013

B.COM – VI SEMESTER

Corporate Knowledge Integration

Duration: 3 Hours                                                                                            Max. marks: 100

Answer Question number 1 which is compulsory [30 marks]   and any five from the remaining  questions.  [14 marks each].

Question number :1 – Compulsory question.                                                     (30 marks)

Top of Form

Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly

Bottom of Form

Assets [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Cash and Equivalents 10,746 9,815 11,261 5,263 11,875
Restrictable Cash
Marketable Securities 18,383 16,137 14,359 18,201 12,615
Receivables 18,692 11,717 9,924 5,057 4,704
Inventories 791 776 1,051 455 509
Prepaid Expenses 475
Current Deferred Income Taxes 2,583 2,014 1,636 1,135 1,447
Other Current Assets 6,458 4,529 3,447 1,444 3,065
Total Current Assets 57,653 44,988 41,678 31,555 34,690
Gross Fixed Assets 21,887 11,768 7,234 4,667 3,747
Accumulated Depreciation (6,435) (3,991) (2,466) (1,713) (1,292)
Net Fixed Assets 15,452 7,777 4,768 2,954 2,455
Intangibles 4,224 3,536 342 247 285
Cost in Excess 1,135 896 741 206 207
Non-Current Deferred Income Taxes
Other Non-Current Assets 97,600 59,174 27,654 12,539 1,935
Total Non-Current Assets 118,411 71,383 33,505 15,946 4,882
Total Assets 176,064 116,371 75,183 47,501 39,572
Liabilities [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Accounts Payable 21,175 14,632 12,015 5,601 5,520
Short Term Debt
Notes Payable
Accrued Expenses 9,879 8,572
Accrued Liabilities 9,879 8,107 5,065 1,293
Deferred Revenues 5,953 4,091 2,984 2,053
Current Deferred Income Taxes 4,405
Other Current Liabilities 1,535 1,140 658 2,559
Total Current Liabilities 38,542 27,970 20,722 11,506 14,092
Long Term Debt
Deferred Income Tax 2,648 2,216 675
Other Non-Current Liabilities 19,312 11,786 6,670 2,139 3,775
Minority Interest
Capital Lease Obligations
Preferred Securities of Subsidiary Trust
Preferred Equity Outside Shareholders’ Equity
Total Non-Current Liabilities 19,312 11,786 6,670 4,355 4,450
Total Liabilities 57,854 39,756 27,392 15,861 18,542
Preferred Shareholder’s Equity
Common Shareholder’s Equity 118,210 76,615 47,791 31,640 21,030
Total Equity 118,210 76,615 47,791 31,640 21,030
Total Liabilities & Shareholder’s Equity 176,064 116,371 75,183 47,501 39,572
Income Statement for Apple Inc.  (AAPL) 
Top of Form

$ 448.85   -11.14 (-2.42%) Volume:  4:00 PM EST 20-Feb-2013

Bottom of Form

After Hours:  $ 448.01   -0.84 (-0.19%) Volume: 118.29 k 7:59 PM EST 20-Feb-2013

 

 

Top of Form

Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly

Bottom of Form

Income [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Operating Revenue 156,508 108,249 65,225 42,905 32,479
Adjustments to Revenue N/A
Cost of Revenue (87,846) (62,617) (38,514) (24,949) (20,861)
Gross Operating Profit 68,662 45,632 26,711 17,956 11,618
Selling/General/Admin Expense (10,040) (7,599) (5,517) (4,149) (3,761)
Research & Development (3,381) (2,429) (1,782) (1,333) (1,109)
EBITDA (Operating Income Before Depreciation) 35,604 19,412 12,474 6,748
Depreciation & Amortization (1,814) (1,027) (734) (473)
Operating Income 58,518 33,790 18,385 11,740 6,275
Interest Income 1,088 519 311 407
Other Income, Net (566) (104) (156) (81) 620
Total Income Before Interest Expense (EBIT) 55,763 34,205 18,540 12,066 6,895
Interest Expense N/A
Income Before Tax 55,763 34,205 18,540 12,066 6,895
Income Taxes (14,030) (8,283) (4,527) (3,831) (2,061)
Minority Interest
Net Income from Continuing Operations 41,733 25,922 14,013 8,235 4,834
Net Income from Discontinued Operations
Net Income from Total Operations 41,733 25,922 14,013 8,235 4,834
Normalized Income 41,733 25,922 14,013 8,235 4,834
Extraordinary Income/Loss
Special Income/Charges
Income from Cum. Effect of Acct Change
Income from Tax Loss Carryforward
Other Gains
Total Net Income 41,733 25,922 14,013 8,235 4,834
 

 

 

 

 

 

 09/2012 09/2011 09/2010 09/2009 09/2008  
Dividends Paid Per Share 2.65 0.00 0.00 0.00 0.00
Preferred Dividends
Basic EPS from Continuing Operations 44.64 28.05 15.41 9.22 5.48
Basic EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Basic EPS from Total Operations 44.64 28.05 15.41 9.22 5.48
Diluted EPS from Continuing Operations 44.15 27.68 15.15 9.08 5.36
Diluted EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Diluted EPS from Total Operations 44.15 27.68 15.15 9.08 5.36
Results [+] in Dollars (Preferred Dividends in Millions)

 

From the above Balance sheet statement Calculate the following for the latest three years :        [Three marks each  for answer( a to h) and 6 marks for( i)]

  1. Current ratios
  2. Operating profit ratio
  3. Total dividend paid every year[Assume $1 nominal value per share]
  4. Interest coverage ratio
  5. Fixed assets purchased every year
  6. Gross operating profit ratio
  7. Average income tax rate
  8. Inventory turnover ratio
  9. Study the performance based on the above calculation give a brief report in five lines.[6 marks]

Question number:2

I am Vijay,  very fortunate to take responsibility to earn and look after my family and also manage my studies at SJCC. My college fee was due from June and  examination fee is to be paid within 10 days. My attendance is near border. This is my true story. I begin my day at 2.30 am. My friend Prasad and I take a mini van and drive  from KR Puram to KR Market to buy tomatoes and supply them  to hotels. Every day  I get standard orders from hotels. I supply tomatoes early in the morning before coming to class at SJCC and collect money in the evening after my classes. This is one of the reasons why I find difficult to complete assignments given by lecturers.

We buy basket of tomatoes. The weight of each basket ranges from 5 to 6.5 kg. We can not open the basket and measure each basket  to find the exact number of kilograms at KR Market. We have to accept whatever the trader supplies. There are broken tomatoes and rotten tomatoes at the bottom of  the basket. Hotels never accept broken or rotten tomatoes.

We buy 30 baskets of tomatoes at Rs. 35 per basket every day. Each basket is weighing, on an average, 5 kg.  We load them in a mini van and bring them to an open space under  KR Puram flyover and open the basket and remove the broken and rotton tomatoes. We have kept  a religious statue so that other people do not occupy our place(not that we are sentimental towards our religion).

Invariably we loose a Kg per basket. We put back 4 kg per basket and deliver them to the hotels.  The minivan charges Rs.200 per day as a rental charge. We take by-two coffee twice costing Rs. 14(total). We put 1 litre of diesel costing Rs. 45 every day.

 

 

We collect in the evening Rs.15 per Kg. from our customers(Hotels).

  1. Calculate cost per kg of tomato and per basket of tomato before supplying to hotels.
  2. Prepare Income Statement for one month(30 days).
  3. Each one’s share of profits at the end of one month(30 days).
  4. If Vijay wants to pay the balance of college fees of Rs.10,000; how many days he has to work in a month to earn Rs.10,000?
  5. If his college fee for the next semester will be 30,000 and he has to pay Rs. 3,000 per month in how many months can he manage to earn the required sum?

 

 

 

 

 

Question number: 3

The Balance sheet on the 1st day is as follows: Assume that he/she is a dealer in plant and machinery.

Liabilities Amount Assets Amount
Capital

Loan from friend

40,00,000

4,00,000

Cash

Inventory

37,00,000

7,00,000

On the second day computers worth Rs. 2,00,000 purchased for cash. On the third  day plant purchased Rs. 8,00,000 on credit. On the fourth day stationary purchase for Rs.50,000 for cash. On the Fifth day goods sold for Rs. 3,00,000 on credit (cost Rs. 2,50,000). On the sixth day loan of Rs. 3,00,000 received from Indian Bank and invited tender to acquire 10 plants for Rs. 15,00,000.

Answer the following questions ( Any 7 sub divisions):

  1. The balance sheet total on the asset side at the end of the sixth day is ________lakhs
  2. The Balance sheet total on the liability side at the beginning of fifth day is ____________.
  3. Inventory on the third day is _____________.
  4. The Trade receivables at the end of the 6th day is
  5. The Balance sheet cash position at the beginning of the fourth day is __ ______.
  6. The merchandise value at the end of fifth day will be ____________ if goods are sold at 30% profit on sale on the fifth day.
  7. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.
  8. On the fourth day journal entry for the purchase of stationary _____________ is credited.
  9. Identify the first day transaction and pass journal entry________________

 

 

Question Number: 4

PARTICULARS QUANTITY RATE AMOUNT
Opening stock 1000 10 100000
Purchases : April 5000 12 600000
Sep 4000 13 52000
Jan 3000 9 27000
Closing inventory 2000 ? ?

 

You are required to calculate the following-

  1. Closing stock under FIFO, LIFO, Weighted average methods
  2. Cost of goods sold
  3. Net profit, if selling price per unit equal to Rs.25 and assume operating expenses and the amount of depreciation is Rs.etc.
  4. Income tax
  5. Cash Inflows

 

 

 

 

Question Number: 5

A Cement  Manufacturer has provided you with the details of the two Grades of Cement manufactured and sold for a given period. Using the information:

Particulars   Cement Grade 53   Cement Grade 43  
           
Sales amount   1,23,000   1,63,800  
Sales quantity(Kg.)   1500   2100  
Variable cost   93,000   1,17,600  
Fixed Cost   24,960    
Product Mix   60%   40%
   
  1. Estimate their respective Break Even Quantity
  2. The Margin of safety in Units and Value
  3. The Revised Break Even if the overall Profit after Tax estimated by the company, is 20% (on a tax rate of 25%)

 

 

Question Number:6

I had purchased $25,000 worth of shares at Rs 120 per share in Indian market(1$ =Rs52) on 1st January 200X. I plan to sell 60% of such number of shares on 31st December 2013  at Rs 150 per share. The expected market value 1$ = Rs50. The cost of capital (Discounting rate) is 12% per annum.

Calculate the following:

  1. What is the purchase price in Indian rupee?
  2. What is the total sales in dollar?
  3. What is the net profit /loss incurred in dollar?
  4. What is the profit earned without fluctuation in the foreign currency?
  5. What is the profit /loss due to currency fluctuation? (Verify your answer whether your calculation is correct).

 

Question Number: 7

An agriculturist has 480 hectares of land on which he grows potatoes, peas and carrots. Out of the total area of land 340 hectares are suitable for all four vegetables but the remaining 140 hectares of land are suitable only for growing peas and carrots. Labour for all kinds of farm works is available in plenty.

The market requirement is that all the four types of vegetables must be produced with the minimum of 5000 boxes of any one variety. The farmer has decided that the area devoted to any one crop should be in terms of complete hectares and not in fractions of a hectare. The only other limitations is that not more than 1,13,750 boxes of any one vegetables should be produ                                                                                                                                                                         The relevant data concerning production, market prices and costs are as under:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required:

 

Calculate the area to be cultivated with respect to each crop within the constraints and profits before land development work is undertaken.

 

 

Question Number: 8

 

Pass an appropriate journal entries:

1.      Cash withdrawn from bank  Rs.20,000

2.      Building sold Rs. 40,00,000(dealer in building)

3.        Debtors become bad Rs. 2000.

4.        Made provision for bad and doubtful debts Rs.1000 .

5.        Income tax refund to sole proprietor Rs. 30000 but credited to business account

  1. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.
  2. Interest earned but due Rs. 5,000 on our investment of 50,000.

 

Question Number: 09

The first Jesuit, Cardinal Jorge Mario Bergoglio  becomes Pope Francis. Without fanfare picked up his baggage and insisted on paying his bill like any other Jesuit normally does during Jesuit formation… because he was concerned about giving a good example of what priest and bishop should do. Earlier he lived in a small apartment and cooked his own food  in the Argentine capital instead of the palace allotted to him.

Inspired by the Pope Francis’ simplicity Madurai Jesuit order have studied their province schools and colleges to restructure principal/head master and administrative offices. At present half of the size of office is equal to Headmaster/principal’s room. Some of the departmental staff rooms are quarter of principal’s room. Some of the class rooms where more than 60 students sit and study everyday with two or three fans are much smaller than the principal/headmaster’s room.

In order to study the ideal size of the head of the institution, some of the Jesuits visited multinational CEO offices in Bangalore and Chennai. The normal size of the CEO’s office is 10 x 8 for their administration  work. The CEO meets visitors in a common parlor. Common parlor can be used by any manager. Every inch of a city has cost. In an educational institution, we may not realize the real cost, but opportunity social costs are involved. It had been never noticed the social opportunity cost. Some of the city private schools and colleges already made relevant changes by reducing the space at  the principal administrative office.

As a student of SJCC, having studied CKI(Corporate Knowledge Integration) suggest the management of Madurai Province how reduction of the size of Headmaster/Principal’s room will benefit the institution in cost savings. Identify the functions of a school headmaster/principal of a college and space required for his /her administration. Explain why relevant cost and benefits a Use relevant cost and relevant benefits, opportunity cost/benefits, social cost and social benefits analysis. What are the social costs and social benefits? Explain.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scheme of valuation – CKI

Corporate Knowledge Integration-2013

III B.Com

Answer Question number 1 which is compulsory [30 marks]and any five from the rest[14 marks each].

Question number:1[compulsory]

Top of Form

Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly

Bottom of Form

Assets [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Cash and Equivalents 10,746 9,815 11,261 5,263 11,875
Restrictable Cash
Marketable Securities 18,383 16,137 14,359 18,201 12,615
Receivables 18,692 11,717 9,924 5,057 4,704
Inventories 791 776 1,051 455 509
Prepaid Expenses 475
Current Deferred Income Taxes 2,583 2,014 1,636 1,135 1,447
Other Current Assets 6,458 4,529 3,447 1,444 3,065
Total Current Assets 57,653 44,988 41,678 31,555 34,690
Gross Fixed Assets 21,887 11,768 7,234 4,667 3,747
Accumulated Depreciation (6,435) (3,991) (2,466) (1,713) (1,292)
Net Fixed Assets 15,452 7,777 4,768 2,954 2,455
Intangibles 4,224 3,536 342 247 285
Cost in Excess 1,135 896 741 206 207
Non-Current Deferred Income Taxes
Other Non-Current Assets 97,600 59,174 27,654 12,539 1,935
Total Non-Current Assets 118,411 71,383 33,505 15,946 4,882
Total Assets 176,064 116,371 75,183 47,501 39,572
Liabilities [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Accounts Payable 21,175 14,632 12,015 5,601 5,520
Short Term Debt
Notes Payable
Accrued Expenses 9,879 8,572
Accrued Liabilities 9,879 8,107 5,065 1,293
Deferred Revenues 5,953 4,091 2,984 2,053
Current Deferred Income Taxes 4,405
Other Current Liabilities 1,535 1,140 658 2,559
Total Current Liabilities 38,542 27,970 20,722 11,506 14,092
Long Term Debt
Deferred Income Tax 2,648 2,216 675
Other Non-Current Liabilities 19,312 11,786 6,670 2,139 3,775
Minority Interest
Capital Lease Obligations
Preferred Securities of Subsidiary Trust
Preferred Equity Outside Shareholders’ Equity
Total Non-Current Liabilities 19,312 11,786 6,670 4,355 4,450
Total Liabilities 57,854 39,756 27,392 15,861 18,542
Preferred Shareholder’s Equity
Common Shareholder’s Equity 118,210 76,615 47,791 31,640 21,030
Total Equity 118,210 76,615 47,791 31,640 21,030
Total Liabilities & Shareholder’s Equity 176,064 116,371 75,183 47,501 39,572
Income Statement for Apple Inc.  (AAPL) 
Top of Form

$ 448.85   -11.14 (-2.42%) Volume:  4:00 PM EST 20-Feb-2013

Bottom of Form

After Hours:  $ 448.01   -0.84 (-0.19%) Volume: 118.29 k 7:59 PM EST 20-Feb-2013

 

 

Top of Form

Statement:                    Balance Sheet Income Statement Cash Flow View:              Annual Quarterly

Bottom of Form

Income [+] in Millions of Dollars
09/2012 09/2011 09/2010 09/2009 09/2008
Operating Revenue 156,508 108,249 65,225 42,905 32,479
Adjustments to Revenue N/A
Cost of Revenue (87,846) (62,617) (38,514) (24,949) (20,861)
Gross Operating Profit 68,662 45,632 26,711 17,956 11,618
Selling/General/Admin Expense (10,040) (7,599) (5,517) (4,149) (3,761)
Research & Development (3,381) (2,429) (1,782) (1,333) (1,109)
EBITDA (Operating Income Before Depreciation) 35,604 19,412 12,474 6,748
Depreciation & Amortization (1,814) (1,027) (734) (473)
Operating Income 58,518 33,790 18,385 11,740 6,275
Interest Income 1,088 519 311 407
Other Income, Net (566) (104) (156) (81) 620
Total Income Before Interest Expense (EBIT) 55,763 34,205 18,540 12,066 6,895
Interest Expense N/A
Income Before Tax 55,763 34,205 18,540 12,066 6,895
Income Taxes (14,030) (8,283) (4,527) (3,831) (2,061)
Minority Interest
Net Income from Continuing Operations 41,733 25,922 14,013 8,235 4,834
Net Income from Discontinued Operations
Net Income from Total Operations 41,733 25,922 14,013 8,235 4,834
Normalized Income 41,733 25,922 14,013 8,235 4,834
Extraordinary Income/Loss
Special Income/Charges
Income from Cum. Effect of Acct Change
Income from Tax Loss Carryforward
Other Gains
Total Net Income 41,733 25,922 14,013 8,235 4,834
09/2012 09/2011 09/2010 09/2009 09/2008
Dividends Paid Per Share 2.65 0.00 0.00 0.00 0.00
Preferred Dividends
Basic EPS from Continuing Operations 44.64 28.05 15.41 9.22 5.48
Basic EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Basic EPS from Total Operations 44.64 28.05 15.41 9.22 5.48
Diluted EPS from Continuing Operations 44.15 27.68 15.15 9.08 5.36
Diluted EPS from Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Diluted EPS from Total Operations 44.15 27.68 15.15 9.08 5.36
Results [+] in Dollars (Preferred Dividends in Millions)

 

From the above Balance sheet statement Calculate the following for the latest three years :[Three marks each  for answer( a to h) and 6 marks for( i)]

  1. Current ratios
  2. Operating profit ratio
  3. Total dividend paid every year[Assume $1 nominal value per share]
  4. Interest coverage ratio
  5. Fixed assets purchased every year
  6. Gross operating profit ratio
  7. Average income tax rate
  8. Inventory turnover ratio
  9. Study the performance based on the above calculation give a brief report in five lines.[6 marks]

Answer:[Answers are latest years to preceding years.]

Total Current Assets 57,653 44,988 41,678 31,555 34,690

Total Current Liabilities

38,542

27,970

20,722

11,506

14,092

Common Shareholder’s Equity

118,210

76,615

47,791

31,640

21,030

Gross Fixed Assets

21,887

11,768

7,234

4,667

3,747

Operating Revenue

156,508

108,249

65,225

42,905

32,479

Inventories 791 776 1,051 455 509

 

Gross Operating Profit

68,662

45,632

26,711

17,956

11,618

Operating Income

58,518

33,790

18,385

11,740

6,275

Income Before Tax

55,763

34,205

18,540

12,066

6,895

 

Income Taxes

(14,030)

(8,283)

(4,527)

(3,831)

(2,061)

Dividends Paid Per Share 2.65 0.00 0.00 0.00 0.00

 

 

  1. a) Current ratios are: 1.496; 1.608; 2.01; 2.742; 2.462
  2. b) Operating profit ratios are: 37.39;31.22;28.19; 27.36; 19.32

c)Dividend paid: 2.65 x 1,18210=$3,13,256.5

  1. d) Interest coverage ratio: Nil as there is no interest.
  2. e) Fixed assets purchased every year:10119; 4534; 2567; 920
  3. f) GP ratio:43.87%; 42.15; 40.95; 41.85; 35.77
  4. g) Average Income tax rate: 25.16%; 24.21%; 24.41%; 31.75%; 29.89%
  5. h) Inventory turnover ratio:197.86 times:139.496; 62.059; 94.296; 63.809
  6. i) The company steadily progressing as there is an increase in inventory turnover ratio and decrease in current ratio followed by purchase of fixed assets which is reflected in steady increase in operating profit ratio. It helped the company to declare dividend in the current year. It is a debt free company.

 

Question number:2

I am Vijay,  very fortunate to take responsibility to earn and look after my family and also manage my studies at SJCC. My college fee was due from June and  examination fee is to be paid within 10 days. My attendance is near border. This is my true story. I begin my day at 2.30 am. My friend Prasad and I take a mini van and drive  from KR Puram to KR Market to buy tomatoes and supply them  to hotels. Every day  I get standard orders from hotels. I supply tomatoes early in the morning before coming to class at SJCC and collect money in the evening after my classes. This is one of the reasons why I find difficult to complete assignments given by lecturers.

We buy basket of tomatoes. The weight of each basket ranges from 5 to 6.5 kg. We can not open the basket and measure each basket  to find the exact number of kilograms at KR Market. We have to accept whatever the trader supplies. There are broken tomatoes and rotten tomatoes at the bottom of  the basket. Hotels never accept broken or rotten tomatoes.

We buy 30 baskets of tomatoes at Rs. 35 per basket every day. Each basket is weighing, on an average, 5 kg.  We load them in a mini van and bring them to an open space under  KR Puram flyover and open the basket and remove the broken and rotton tomatoes. We have kept  a religious statue so that other people do not occupy our place(not that we are sentimental towards our religion).

Invariably we loose a Kg per basket. We put back 4 kg per basket and deliver them to the hotels.  The minivan charges Rs.200 per day as a rental charge. We take by-two coffee twice costing Rs. 14(total). We put 1 litre of diesel costing Rs. 45 every day.

We collect in the evening Rs.15 per Kg. from our customers(Hotels).

  1. Calculate cost per kg of tomato and per basket of tomato before supplying to hotels.
  2. Prepare Income Statement for one month(30 days).
  3. Each one’s share of profits at the end of one month(30 days).
  4. If Vijay wants to pay the balance of college fees of Rs.10,000; how many days he has to work in a month to earn Rs.10,000?
  5. If his college fee for the next semester will be 30,000 and he has to pay Rs. 3,000 per month in how many months can he manage to earn the required sum?

 

 

Suggested answers:

Purchase per day ( 30 x 35)=1050

Number of Kgs (30 x 5Kg)    =150kg

Normal loss( 30 x 1)=30 kg

Remaining good units = 120kg

Other related costs per day: petrol Rs.45;Coffee Rs.14 and Rent of mini van Rs.200= 259

Total costs: Rs. 1050 +259=Rs.1,309

Effective cost per kg= Rs.10.908

Profit per Kg = 15- 10.908= Rs.4.09166

Profit per day= 120 x 4.09166=491

Monthly profit = Rs.14,730

Share of profit =7365

Every month savings after paying home = 7365- 3000=4365

No of months to save Rs.30,000 is = 30,000/4365= 6.87 months

 

Question number: 3

The Balance sheet on the 1st day is as follows: Assume that he/she is a dealer in plant and machinery.

Liabilities Amount Assets Amount
Capital

Loan from friend

40,00,000

4,00,000

Cash

Inventory

37,00,000

7,00,000

On the second day computers worth Rs. 2,00,000 purchased for cash. On the third  day plant purchased Rs. 8,00,000 on credit. On the fourth day stationary purchase for Rs.50,000 for cash. On the Fifth day goods sold for Rs. 3,00,000 on credit (cost Rs. 2,50,000). On the sixth day loan of Rs. 3,00,000 received from Indian Bank and invited tender to acquire 10 plants for Rs. 15,00,000.

Answer the following questions ( Any 7 sub divisions):

  1. The balance sheet total on the asset side at the end of the sixth day is ________lakhs
  2. The Balance sheet total on the liability side at the beginning of fifth day is ____________.
  3. Inventory on the third day is _____________.
  4. The Trade receivables at the end of the 6th day is
  5. The Balance sheet cash position at the beginning of the fourth day is __ ______.
  6. The merchandise value at the end of fifth day will be ____________ if goods are sold at 30% profit on sale on the fifth day.
  7. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.
  8. On the fourth day journal entry for the purchase of stationary _____________ is credited.
  9. Identify the first day transaction and pass journal entry________________

 

Answer:Liabilities(Rs. In Lakhs)

Particulars 2nd day 3rd day 4th day 5th day 6th day
Capital

Loan from friends

Trade Payables

Profit

Indian Bank loan

40

4

 

 

 

 

40

4

8

 

 

 

40

4

8

 

 

 

40

4

8

0.5

 

 

40

4

8

0.5

3

 

  44 52 52 52.5 55.5

Assets(in Lakhs)

  2nd day 3rd day 4th day 5th day 6th day
Cash

Inventories

Computer

Stock of stationery

Trade Receivables

35

7

2

 

 

 

44

35

15

2

 

 

 

52

34.5

15

2

0.5

 

 

52

34.5

12.5

2

0.5

3

 

52.5

 

37.5

12.5

2

0.5

3

 

55.5

 

  1. The balance sheet total on the asset side at the end of the sixth day is ________lakhs.[55.5 lakhs]
  2. The Balance sheet total on the liability side at the beginning of fifth day is ____________.[52 lakhs]
  3. Inventory on the third day is _____________.[ 15 lakhs ]
  4. The Trade receivables at the end of the 6th day is  [3 lakhs]
  5. The Balance sheet cash position at the beginning of the fourth day is __ ______.[35 lakhs]
  6. The merchandise value at the end of fifth day will be ____________ assuming goods are sold at 30% profit on sale on the fifth day.[15- 2.1= 12.9]
  7. Profits earned during the first week is  ___________if profit is 30% on cost of merchandise.[1.25 lakhs]
  8. On the fourth day journal entry for the purchase of stationary _____________ is credited.[cash]
  9. Identify the first day transaction and pass journal entry________________

[Cash Account Dr.  37,00,000 Inventory A/C Dr. Rs. 7,00,000 Capital A/C Cr.Rs. 40,00,000 and Loan from A/C  Credit Rs. 4,00,000.]

 

 

 

 

Question Number: 4

PARTICULARS QUANTITY RATE AMOUNT
Opening stock 1000 10 100000
Purchases : April 5000 12 600000
Sep 4000 13 52000
Jan 3000 9 27000
Closing inventory 2000 ? ?

 

You are required to calculate the following-

  1. Closing stock under FIFO, LIFO, Weighted average methods
  2. Cost of goods sold
  3. Net profit, if selling price per unit equal to Rs.25 and assume operating expenses and the amount of depreciation is Rs.etc.
  4. Income tax
  5. Cash Inflows

Solution:

  1. Closing Stock As Per FIFO, LIFO And Average Stock:

Closing Stock (in units): 2000

  1. FIFO

In this method the units bought first are sold first, therefore the closing inventory comprises of the last purchases made. Value of inventory = 2000 x 9 = Rs. 18000

  1. LIFO

In this method the latest units are sold first, therefore the closing inventory comprises of the opening stock and the initial purchases made during the year.

Value of closing stock:

1000 x 10 = Rs. 10000 (out of opening stock)

1000 x 12 = Rs. 12000 (out of purchases in April)

Total Rs. 22000

  1. Average Stock

The Weighted average unit method are used to value the closing stock

Total units = 1000+5000+4000+3000 = 13000

Amount    = 10000+60000+52000+270000 = 149000

Cost/ unit = 149000/13000

= Rs. 11.46

Closing stock -= 2000 x 11.46 = Rs. 22920

  1. Cost Of Goods Sold 
  2. FIFO

Opening stock:        10000

Purchases:              139000

Less: Closing stock (18000)

COGS                    131000

  1. LIFO

Opening stock:          10000

Purchases:        139000

Less: Closing stock (22000)

COGS                      127000

  1. Weighted Average

Opening stock:         10000

Purchases:      139000

Less: Closing stock (22920)

COGS                     126080

  • Calculation Of Net Profit
Particulars FIFO LIFO
Sales

Less : COGS

275000

131000

275000

127000

Gross Profit 144000 148000
Less:  Operating Expenses(assumed) 15000 15000
(A) 129000 133000
Less : Depreciation as per IT Act               (B)(assumed) 20000 20000
Less : Depreciation as per Co., Act           (C)(assumed) 10000 10000
Net Profit As Per Income Tax Act      (A – B) 109000 113000
Net Profit As Per Companies  Act (A – C) 119000 123000

 

  1. Operating Cash Flow:
 Particulars FIFO LIFO
Net Profit as per It Act 109000 113000
Less : Tax @ 34%(assumed) 37060 38420
Profit After Tax 71940 74580
Add : Depreciation as per IT Act(assumed) 20000 20000
Operating Cash Flow 91940 94580

 

  1. Current Ratio Under FIFO:

Current Assets( excluding Inventory )  1,00,000(assumed)

Add : Inventory                                  18,000

TOTAL              1,18,000

Current Liabilities                               40,000 (assumed)

Current ratio = 1,18,000 / 40,000 = 2.95 times.

 

 

Question Number: 5

A Cement  Manufacturer has provided you with the details of the two Grades of Cement manufactured and sold for a given period. Using the information:

Particulars   Cement Grade 53   Cement Grade 43  
           
Sales amount   1,23,000   1,63,800  
Sales quantity(Kg.)   1500   2100  
Variable cost   93,000   1,17,600  
Fixed Cost   24,960    
Product Mix   60%   40%
   
  1. Estimate their respective Break Even Quantity
  2. The Margin of safety in Units and Value
  3. The Revised Break Even if the overall Profit after Tax estimated by the company, is 20% (on a tax rate of 25%)

Solution:

Particulars   Cement Grade 53   Cement Grade 43
Selling Price per unit

Variable cost per unit

 

 

82

62

 

 

78

56

Contribution   20   22
Weighted contribution 20 x 0.6 + 22 x 0.4 = Rs.20.8 per unit  
Break Even Common Fixed Cost/ Weighted Contribution per unit = Rs.24,960/20.8 = 1200 Kg  
Number of Kgs to break even under each category  

 

1200 x 0.6= 720 Kg 1200 x 0.4 = 480 Kg.
Margin of safety   Sales- BES= 1500 – 720= 780 Kg. 2100 – 480 = 1620 Kg
Margin of safety in Rupees   780Kg. X S.P = 780 x 82=63,960 1620Kg x 78 =1,26,360  
Profit after tax

Profit before tax

PBT on Total Sales

Break even sales

 

 

 

 

20%

26.67%

26.67% x (1,23,000 + 1,63,800) = 76,489

(Fixed cost + Required Profit)/ Weighted Contribution per unit

= (24,960 + 76,489)/20.8

= 4877 units

 
Break even sales units under each category 4877 x 0.6= 2926.2 units 4877 x 0.4 = 1951 units  

 

 

Question Number:6

I had purchased $25,000 worth of shares at Rs 120 per share in Indian market(1$ =Rs52) on 1st January 200X. I plan to sell 60% of such number of shares on 31st December 2013  at Rs 150 per share. The expected market value 1$ = Rs50. The cost of capital (Discounting rate) is 12% per annum.

Calculate the following:

  1. What is the purchase price in Indian rupee?
  2. What is the total sales in dollar?
  3. What is the net profit /loss incurred in dollar?
  4. What is the profit earned without fluctuation in the foreign currency?
  5. What is the profit /loss due to currency fluctuation? (Verify your answer whether your calculation is correct).

Solution

  1. Investment in Indian Rupee = $25,000 x 52= Rs. 13,00,000.

The number of shares purchased = 13,00,000/120= 10,833 shares.

 

  1. Sale value in dollar = 60% of 10,833 x 150/50= $19,500

 

  1. c) Net profit in dollar= $19,500 – $16,000= $3,500
  2. d) (150-120)6499.8=Rs.1,94,994; in dollar = Rs.1,94,994/52=$3749
  3. e) (50-52) x 6499.8 shares=Rs.12,996.6; dollar= 12,996/52=$249.92

 

Question Number: 7

An agriculturist has 480 hectares of land on which he grows potatoes, peas and carrots. Out of the total area of land 340 hectares are suitable for all four vegetables but the remaining 140 hectares of land are suitable only for growing peas and carrots. Labour for all kinds of farm works is available in plenty.

The market requirement is that all the four types of vegetables must be produced with the minimum of 5000 boxes of any one variety. The farmer has decided that the area devoted to any one crop should be in terms of complete hectares and not in fractions of a hectare. The only other limitations is that not more than 1,13,750 boxes of any one vegetables should be produced.

The relevant data concerning production, market prices and costs are as under:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required:

 

Calculate the area to be cultivated with respect to each crop within the constraints and profits before land development work is undertaken.

 

Solution  (i)Area to be cultivated in respect to each crop

 

Statement showing contribution per hectare for four vegetables

Particulars Potatoes Peas Carrot Tomatoes
Season’s yield in box/hectare 350 100 70 180
Selling price per hectare 10,766 3176 2576 8019
Less: Variable cost    

952

 

432

 

384

 

624

   Material
Labour 1792 1216 744 1056
Picking  and Packing 2520 656 616 1872
Transport 3640 1040 560 3456
Total Variable Costs 8904 3344 2304 7008
Contribution/Hectare 1862 (168) 272 1011
Ranking

 

 

 

I IV III II

 

Area Available 480 hectare Contribution

Per hectare

Total contribution

 

Peas

Carrot

Tomatoes

Potatoes

5,000/100

Balance(140-50)

5,000/180

Balance(340-28)

50

90

28

312

 

 (168)

272

1011

1862

 

(8,400)

24,480

28,308

5,80,944

 

 

Total contribution   480 hectare    

Rs.6,25,332

 

 

 

Question Number: 8

 

Pass an appropriate journal entries:

8.       Cash withdrawn from bank  Rs.20,000 [Answer: Since the word for  personal use is missing :Cash Account debit and bank account credit]

9.       Building sold Rs. 40,00,000(dealer in building).[ Inventory A/C debit and Trade receivables A/C]

10.     Debtors become bad Rs. 2000.[Answer: Bad debts account debit and Debtors account credit]

11.     Made provision for bad and doubtful debts Rs.1000 [P/L Account Debit and Provision for bad and doubtful debts credit].

12.     Income tax refund to sole proprietor Rs. 30000 but credited to business account[Answer: Bank account  debit and Capital account credit].

  1. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.[Answer: Financial lease will be the property of the lessee(user) and can be depreciated by lessee]
  2. Interest earned but due Rs. 5,000 on our investment of 50,000.[ Interest due a/c Debit to Interest A/C credit]

 

Answer:

Pass an appropriate journal entries:

1.       Cash withdrawn from bank  Rs.20,000 [Answer: Since the word for  personal use is missing :Cash Account debit and bank account credit]

2.       Building sold Rs. 40,00,000(dealer in building).[ Inventory A/C debit and Trade receivables A/C]

3.       Debtors become bad Rs. 2000.[Answer: Bad debts account debit and Debtors account credit]

4.         Made provision for bad and doubtful debts Rs.1000 [P/L Account Debit and Provision for bad and doubtful debts credit].

5.         Income tax refund to sole proprietor Rs. 30000 but credited to business account[Answer: Bank account  debit and Capital account credit].

  1. Financial Lease agreement was made on 2/5/2012 for Rs. 50,00,000 p.a. Advance of Rs. 25,000 was made on the same day.[Answer: Financial lease will be the property of the lessee(user) and can be depreciated by lessee]
  2. Interest earned but due Rs. 5,000 on our investment of 50,000.[ Interest due a/c Debit to Interest A/C credit]

 

 

 

Question Number: 09

The first Jesuit, Cardinal Jorge Mario Bergoglio  becomes Pope Francis. Without fanfare picked up his baggage and insisted on paying his bill like any other Jesuit normally does during Jesuit formation… because he was concerned about giving a good example of what priest and bishop should do. Earlier he lived in a small apartment and cooked his own food  in the Argentine capital instead of the palace allotted to him.

Inspired by the Pope Francis’ simplicity Madurai Jesuit order have studied their province schools and colleges to restructure principal/head master and administrative offices. At present half of the size of office is equal to Headmaster/principal’s room. Some of the departmental staff rooms are quarter of principal’s room. Some of the class rooms where more than 60 students sit and study everyday with two or three fans are much smaller than the principal/headmaster’s room.

In order to study the ideal size of the head of the institution, some of the Jesuits visited multinational CEO offices in Bangalore and Chennai. The normal size of the CEO’s office is 10 x 8 for their administration  work. The CEO meets visitors in a common parlor. Common parlor can be used by any manager. Every inch of a city has cost. In an educational institution, we may not realize the real cost, but opportunity social costs are involved. It had been never noticed the social opportunity cost. Some of the city private schools and colleges already made relevant changes by reducing the space at  the principal administrative office.

As a student of SJCC, having studied CKI(Corporate Knowledge Integration) suggest the management of Madurai Province how reduction of the size of Headmaster/Principal’s room will benefit the institution in cost savings. Identify the functions of a school headmaster/principal of a college and space required for his /her administration. Explain why relevant cost and benefits a Use relevant cost and relevant benefits, opportunity cost/benefits, social cost and social benefits analysis. What are the social costs and social benefits? Explain.

 

 

 

Answer:

Relevant cost and relevant benefits are to be explained.

Social costs and social benefits are to be explained.

 

 

 

St. Joseph’s College of Commerce B.Com. 2015 VI Sem Corporate Knowledge Integration Question Paper PDF Download

 

  1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION – MARCH / APRIL 2015

 B.COM – VI SEMESTER  
C1 11 604: CORPORATE KNOWLEDGE INTEGRATION
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
  Answer Question No. 1 which is compulsory and any other four questions from the remaining: Each carries 20 Marks.                                                  (5×20=100)

 

  1. Old Plant and Machinery (original costs) Rs. 15,00,000 purchased on 30/9/2012; salvage value is Rs. 1,00,000. Life is 4 years. The rate of depreciation as per the companies Act  in straight line method whereas income tax rate of depreciation is 25%.

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 4th October 2013, calculate depreciation as per the Companies and IT Act.

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

  2. A cement manufacturer has provided you with the details of the two grades of cement manufactured and sold for a given period

Particulars Cement Grade 53 Cement Grade 43
Sales amount

Sales quantity (Kg)

Variable cost

Fixed cost

Product mix

1,23,000

1500

 

93,000

24,960

60%

1,63,800

2100

 

1,17,600

40%

 

·         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%

  3.
  1. I had purchased & 20000 worth of shares at Rs. 125 per share from the Indian Market (1& = Rs. 42) on 1st January.  I plan to sell 80% of the shares on 31st 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.

 

  4. Bombay steel manufactures four products, namely A,B,C and D, using the same plant and process. The following information relates to a production period:

Product Volume Material cost per unit (Rs.) Direct labour per unit Machine time per unit Labour cost per unit
A 500 5 ½ hour ¼ hour 3
B 5,000 5 ½ hour ¼ hour 3
C 600 16 2 hours 1 hour 12
D 7,000 17 1 ½ hours 1 ½ hours 9

 

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

(Rs)

Factory overheads applicable to machine oriented activity 37,424
Set up costs are 4,355
Cost of ordering materials 1,920
Handling materials 7,580
Administration for spare parts 8,600

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:

Product Number of set-ups Number of materials orders Number of times material was handled Number of spare parts
A 1 1 2 2
B 6 4 10 5
C 2 1 3 1
D 8 4 12 4

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.

  5. The data below relates to Venus Ltd., which makes and sells computers:

  MARCH APRIL
Sales 5000 Units 10,000 Units
Production 10,000 Units 5,000 Units
Selling price per unit (Rs) 100 100
Variable production cost per unit(Rs) 50 50
Fixed production overhead incurred 1,00,000 1,00,000
Fixed production overhead cost per unit, being the pre-determined overhead absorption rate 10 10
Selling distribution and administration cost (all fixed) 50,000 50,000

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

(a)   Absorption costing (b) Marginal costing

  6. Ambika Condiments bring out 2 products “SUCHI” and “RUCHI” which are popular in market. The management has the option to alter the sales-mix of the 2 products from out of the following combinations:

Option SUCHI (Units) RUCHI (Units)
I 800 600
II 1,600
III 1,300
IV 1,100 500

 

The per unit production cost/sales data are:

  SUCHI RUCHI
Direct Material (Rs.) 25 30
Direct Labour (hours) 10 12

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.

  7. Prepare a Cash budget for the three months ending 30th June from the following information

(Rs. ‘000)

Month Sales Materials Wages Overheads
February

March

April

May

June

14

15

16

17

18

9.6

9

9.2

10

10.4

3

3

3.2

3.6

4

1.7

1.9

2

2.2

2.3

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 1st 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 1st 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

 

 

 

 

 

8. Prepare Balance sheet on daily basis.  Assume that all these transactions occurred in March 1st to 12th  and that there were no other transactions in March

  • 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.

 

 

St. Joseph’s College of Commerce VI Sem Corporate Knowledge Integration Question Paper PDF Download

REG NO:

ST. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESER EXAMINATION – MARCH/APRIL 2016
B.COM – VI SEMESTER
 c111604 : CORPORATE KNOWLEDGE INTEGRATION
Duration: 3 Hours                                                                                             Max. Marks: 100
SECTION – A
I) Answer any five questions.  Question No. 1 is compulsory. Each carries 20 marks.

                                                                                                                              (5×20=100)                                                                                                                            

  1. Summer started very early in Bangalore in the month of March 2016. Early rain was a quick relief to a Bangalurian. However, I am in deep trouble as I had constructed three story apartments two years back with a single bore well. I had spent Rs. 3,00,000 for the bore well having a depth of 600 feet.  Half tank of water is insufficient for the entire apartment. One of my friends has advised me to drill the existing bore well for a further depth of 500 feet which will cost me further Rs.2,50,000.  Another friend suggested to drill another bore well for a depth of 900 feet which will cost Rs. 3,00,000. My neighbour drilled a bore well just one month back and was forced to close down due to mud sliding.  In case of mud sliding, cementing of mud sliding is possible by spending additionally Rs. 1,00,000.

On 24th March 2016, Kannan Borewell arrived, drilled 600 feet. I had paid advance of Rs. 1,90,000 for 600 feet. There was 2 inch water which is more than sufficient for the apartments. The existing driller can not go beyond 600 feet, therefore Kannan Borewell started removing the driller one by one. While removing the last leg of 100 feet, the driller was stuck due to mud sliding. They  panicked and tried for two days to remove  it  but could not do so. Kannan Borewell went off without their driller.

I tried to call them again and again over a phone and spoke to the general manager about the incidents. Finally he had agreed to drill another borewell upto 600 feet on 4th April 2016. I have agreed to spend additionally upto 600 feet Rs. 50,000 more. This time I have decided to cement the mud sliding from the beginning which will cost me additionally Rs. 1,00,000.

Required with reason(s):

i)                   What costs are relevant before 24th March 2016 for decision making?

ii)                 Identify the costs that are irrelevant before 24th march 2016.

iii)              Identify costs that are relevant  and irrelevant on 24th march 2016 before drilling and after drilling the bore well.

iv)               Identify costs that are relevant and irrelevant on 4th April 2016.

 

  2. 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

 

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?

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?

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?

d) If 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?

e) If the labourers are contract labourers do you accept to process at 2 pounds per account?

 

  3. Platinum  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 (M) ECONOMY CLASS

(M)

Revenues 8,18,40,000 53,61,76,000
Total available seats 6200 72850
Average utilisation rate 60% 80%
Average variable cost per seat 14,960 4,968
Fixed costs 22,53,04,576
Depreciation 96, 81,056
Total Investment 34, 32,37,440

 

They require you to estimate the following for the Co.

a)      The Breakeven point in terms of seats

b)     The Cash Break even in terms of seats

c)      The Break Even seats to target a post tax return of 6% on investments if  tax rate is 40%.

  4. A cement manufacturer has provided you with the details of the two grades of cement manufactured and sold for a given period

(in Rs)

Particulars Cement Grade 53 Cement Grade 43
Sales amount

Sales quantity (kg)

Variable cost

Fixed cost

Product mix

1,23,000

1500

 

93,000

24960

60%

1,63,800

2100

 

1,17,600

 

40%

 

·         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%

 

  5. Mr. D had completed 12th standard, securing 200 marks in Accountancy and commerce. Due to poor economic conditions in the family he could not go for higher studies but did a diploma in printing and designing. With high level of inclination to further studies he joined BBM by correspondence and completed it successfully. With high level of ambition he started a small business with a simple capital by supplying furniture worth Rs. 25,000, Computer Rs. 30,000, and paid advance for rented building Rs. 50,000 in Coimbatore. Under self employment scheme he borrowed Rs. 50,000 from the bank for working capital @14% per annum. Following are the transactions on a day to day basis.

Day 1 Purchased stationary Rs. 4,000
Day 2 Purchased software Rs. 2,000
Day 3 Received an order for Rs. 10,000. Cost to fulfill the order is Rs. 6,000
Day 4 Printed Materials and supplied the order received on day 3
Day 5 Received cash for the supply of the order received on day 3
Day 6 Purchased ink for printing Rs. 2,000
Day 7 Rest day

 

Required: assume interest occurs once in a year. Prepare a daily balance sheet incorporating changes in the balance sheet.

 

  6. A company is considering two alternative proposals for conveyance facilities for its sales personnel who have to do considerable travelling; every sales person approximately  travels 20,000 kilometres every year.

The proposals are as follows:

i)             Purchase and maintain its own fleet of cars. The Purchase  cost of a car is Rs. 4,00,000. Each sales personnel will be provided one car.

ii)                                                                                                        Allow the executive use his own car and reimburse expenses at the rate of Rs. 9.7 per kilometre and also the company bears insurance cost.

The following further details are available:

Diesel Rs. 4.5 per kilometre.,

Repairs and maintenance Rs. 1 per kilometre.,

Tyre Rs. 0.80 per kilometre.,

Insurance Rs. 6,000 per car per annum

Taxes Rs. 4,000 per car per annum

Life of the car: 5 years with annual mileage of 20,000 kilometres

Resale value Rs. 80,000 at the end of 5th year. Depreciation  is as per straight line method.

Work out the relative costs of two proposals and rank them.

What are the other factors that have to be considered while deciding the alternatives?

 

 

 

 

 

 

  7. Bombay steel manufactures four products, namely A,B,C and D, using the same plant and process. The following information relates to a production period:

Product Volume Material cost per unit (Rs.) Direct labour per unit Machine time per unit Labour cost per unit
A 500 5 ½ hour ¼ hour 3
B 5,000 5 ½ hour ¼ hour 3
C 600 16 2 hours 1 hour 12
D 7,000 17 1 ½ hours 1 ½ hours 9

Total production overhead recovered by the cost accounting system is analysed under the following headings:                                                                                                                                                       (Rs)

Factory overheads applicable to machine oriented activity 37,424
Set up costs are 4,355
Cost of ordering materials 1,920
Handling materials 7,580
Administration for spare parts 8,600

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:

Product Number of set-ups Number of materials orders Number of times material was handled Number of spare parts
A 1 1 2 2
B 6 4 10 5
C 2 1 3 1
D 8 4 12 4

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.

 

  8. An agriculturist has 480 hectares of land on which he grows potatoes, peas, Tomatoes and carrots.  Out of the total area of land 340 hectares are suitable for all four vegetables but the remaining 140 hectares of land are suitable only for growing peas and carrots.  Labour for all kinds of farm works is available in plenty.

The market requirement is that all the four types of vegetables must be produced with the minimum of 5000 boxes of any one variety.  The farmer has decided that the area devoted to any one crop should be in terms of complete hectares and not in fractions of a hectare.  The only other limitations is that not more than 1, 13,750 boxes of any one vegetables should be produced.

The relevant data concerning production, market prices and costs are as under:

Particulars Potatoes Peas Carrots Tomatoes
Annual yield:

Boxes per hectare

 

350

 

100

 

70

 

180

Cost:

Direct Material per hectare

`

952

`

432

`

384

`

624

Direct Labour:

Growing per hectare

 

1792

 

1216

 

744

 

1056

Harvesting and packing per box 7.20 6.56 8.80 10.40
Transport per box 10.4 10.40 8.0 19.20
Market price per box 30.76 31.76 36.80 44.55

It is possible to make the land presently suitable for peas and carrots, viable for growing potatoes and tomatoes if certain land development work is undertaken.  This work will involve a capital expenditure of  `6,000 per hectare which a bank is prepared to finance at the rate of 15% per annum.  If such improvement is undertaken, harvesting cost of the entire crop of tomatoes will decrease on an average by  `2.60 per box.

Required:

i)                   Calculate the area to be cultivated with respect to each crop within the constraints and profits before land development work is undertaken.

ii)                 After development of land, find the acres of land for each product and also find maximum profits.

 

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