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Case 1:
Present the following information to show the management (a) the marginal product
cost and the contribution per unit., (b) the total contribution and profits resulting
from each of the following sales mixture:
Product per
unit
Direct materials A Rs.
10.00
B Rs. 9.00
Direct wages A Rs. 3.00
B Rs. 2.00
Sales mixture:
i) 1000 units of product A and 200 units of B
ii) 1500 units of product A abd 1500 units of B
iii) 2000 units of product A and 1000 units of B
Case 2:
From the following data you are required to present to the management (a) the
marginal cost of the product X nad Y and the contribution per unit., (b) the total
contribution and profits resulting from each of the following sales mixture:
Direct materials :
Product X Rs. 10.50 per unit
Product Y Rs. 8.50 per unit
Direct wages:
Product X Rs. 3.00 per unit
Product Y Rs. 2.00 per unit
Selling Price
Product X Rs. 20.50 per unit
Product Y Rs. 14.50 per unit
Fixed expenses 9Total) Rs. 800
Variable expenses 100% of direct wages per product
An exporter offers to buy 5000 units per month at the rate of Rs. 6.50 per
unit and the company hesitates to accept the offer for fear of increasing its
already large operating losses.
Advise whether the company should accept or decline this offer.
Case 4:
The cost per unit of three products X, Y and Z are given below:
Products X Y Z
Direct materials (Rs.) 20 16 18
Direct labour (Rs) 12 14 12
Variable overheads 8 10 6
Fixed expenses 6 6 4
Total 46 46 40
Profit 18 14 12
Selling Price (Rs.) 64 60 52
No. of units produced 10,000 5,000 8,000
Case 5:
A machine manufactures 10,000 units of a part at a total cost of Rs. 21 of
which Rs. 18.00 is variable. This part is readily available in the market at Rs.
19 per unit.
If the product is purchased from the market then the machines can
either be utilized in manufacture a component in same quantity contributing
Rs. 2.00 per component or it can be hired out at Rs. 21,000. Recommend
which of the alternative is profitable?
Case 6:
The accounts of a company reveal the following information:
Profit Rs. 14,00,000
Fixed cost Rs. 10,00,000
Selling price per unit Rs. 50
Variable cost per unit Rs. 20
Market sensitivity analysis suggests the following response to price
level change:
Case 7:
A radio manufactureing company finds that while it costs Rs. 6.25 each to
make component X273, the same is available in the market at rs. 5.75 each,
with an assurance of continuous supply. The breakdown costs is:
Materials Rs. 2.75 each
Labour Rs. 1.75 each
Other variable costs Re. 0.50 each
Depreciation and other fixed costs Rs. 1.25 each
Total Rs. 6.25 each
Case 8:
From the following details, state which product is more profitable to
manufacture. Assume time as the key factor:
Product A Product B
(per Unit) (per Unit)
Materials Rs. 24 Rs. 14
Labuour (Re 1.00 per hour) Rs. 2 Rs. 3
Variable overheads (Rs 2 per hour) Rs. 4 Rs. 6
Sale price Rs. 100 Rs. 110
Standard time to produce 2 Hours 3 Hours
Case 9:
A confectioner markets three products, all of which require sugar. His
average monthly sales cost of sugar and sugar consumption are as follows:
Product X Product Y Product Z Total
Sales Revenue Rs. 10,000 Rs. 12,000 Rs. 8,000 Rs.
30,000
Cost of Sales Rs. 6,000 Rs. 8,000 Rs. 5,000 Rs. 19,000
Sugar requirement 500 kg 800 Kg 200 kg
1500 kg