Cost Management Test Questions & Suggested Solutions

21056 WordsDec 1, 201085 Pages
SREERAM COACHING POINT COST Management Test Questions & Suggested Solutions by L. Muralidharan, FCA., Grad. CWA., COST MANAGEMENT - TEST QUESTIONS & SOLUTIONS Question: 1 Bharata Ltd is considering proposals for design changes in one of a range of soft toys. The proposals are as follows: (a) Eliminate some of the decorative stitching from the toy. (b) Use plastic eyes instead of glass eyes in the toys (two eyes per toy). (c) Change the filling material used. It is proposed that scrap fabric left over from the body manufacture be used instead of the synthetic material which is currently used. The design change proposals have been considered by the management team and the following information has been gathered: (a) Plastic eyes…show more content…
Question : 3 The Chakrapani Ltd 's Cost behaviour is as follows: Production range in units 0- 20000 20001 - 65000 65001 - 90000 90001 - 100000 Fixed cost Rs. 160000 Rs. 190000 Rs. 210000 Rs. 250000 At an activity of 70000 units per year, variable costs total 280000.Full capacity is 100000 units per year. Required: (1) Production is now set at 50000 units per year with a sales price of Rs.7.50 per unit. What is the minimum number of additional units needed to be sold in an unrelated market at Rs.5.50 per unit to show a net profit of Rs.3000 per year? (2) Production is now set at 60000 units per year. By how much may sales promotion costs be increased to bring production up to 80000 units and still earn a net profit of 5% of total sales if the selling price is held at Rs.7.50? (3) If net profit is currently Rs.10000 with fixed costs at Rs.160000 and a 2% increase in price will leave units sold unchanged but increase profits by Rs.5000.What is the present volume in units? Question: 4 The manager of a business has received enquiries about printing three different types of advertising leaflet. Information concerning these three leaflets is shown below: A Selling prices per 1000 leaf lets Estimated printing costs: Variable per 1000 leaflets Specific fixed costs per month 40 2,400 70 4,000 130 9,500 100 B 220 C 450 In addition to specific fixed costs a further Rs. 4,000/- per month would be incurred in renting special premises if any or all of the
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