Isbm - Cost Accunting Management

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COST ACCUNTING MANAGEMENT

CASE STUDY : 1

Materials X and Y are used as follows :

Minimum usage — 50 units each per week

Minimum usage — 150 units each per week

Normal usage — 100 units each per week

Ordering quantities x = 600 units

Y = 1000 units

Delivery period x = 4 to 6 weeks

Y = 2 to 4 weeks

Calculate for each material

a) Minimum level

b) Maximum level

c) Order level

d) Explain importance of inventory controls?

CASE STUDY : 2

A company presently sells an equipment for Rs 35,000. Increase in prices of labour and

material cost are anticipated to the extent of 15% and 10% respectively, in the coming

year. Material cost represents 40% of cost of sales and labour cost 30% of cost sales.

The remaining relate to overheads. If the existing selling price is retained despite the

increase in labour and material prices. The company would face a 20% decrease in the

existing amount of profit on the equipment.

Question :

1) You are required to arrive at a selling price so as to give the same percentage of

profit on increased cost of sales, as before.

2) Prepare a statement of profit / loss per unit, showing the new selling price and cost

per unit in support of your answer.

3) What is the anticipated amount of increased material and labour cost.

4) What policy changes should the company make for maintaining the profits.

CASE STUDY : 3

A product passes through two processes. The output of process, I becomes the input of

process II and the output of process II is transferred to wearhouse. The quantity of raw

materials introduced into process I is 20000 Kg at Rs 10 per kg. The cost and output

data for the month under review are as under.

Process I Process II

Direct Materials (Rs) 60,000 40,000

Direct Labour (Rs) 40,000 30,000

Production overheads (Rs) 39,000 40,250

Normal loss...