Cost and Management Accounting - November 2019

Limited produces 4,000 Litres of paints on a quarterly basis. Each Litre requires 2 kg of raw material. The cost of placing one order for raw material is ` 40 and the purchasing price of raw material is ` 50 per kg. The storage cost and interest cost is 2% and 6% per annum respectively. The lead time for procurement of raw material is 15 days. Calculate Economic Order Quantity and Total Annual Inventory Cost in respect of the above…

(a) PQR Ltd has decided to analyse the profitability of its five new customers. It buys soft drink bottles in cases at ` 45 per case and sells them to retail customers at a list price of ` 54 per case. The data pertaining to five customers are given below: Particulars A B C D E Number of Cases Sold 9,360 14,200 62,000 38,000 9,800 List Selling Price (`) 54 54 54 54 54 Actual Selling Price (`) 54 53.40…

(a) A hotel is being run in a Hill station with 200 single rooms. The hotel offers concessional rates during six off-season months in a year. During this period, half of the full room rent is charged. The management's profit margin is targeted at 20% of the room rent. The following are the cost estimates and other details for th e year ending 31st March ,2019: (i) Occupancy during the season is 80% while in the off-season it is 40%.…

(a) Zico Ltd. has its factory at two locations viz Nasik and Satara. Rowan plan is used at Nasik factory and Halsey plan at Satara factory. Standard time and basic rate of wages are same for a job which is similar and is carried out on similar machinery. Normal working hours is 8 hours per day in a 5 day week. Job at Nasik factory is completed in 32 hours while at Satara factory it has taken 30 hours. Conversion…

(a) PJ Ltd manufactures hockey sticks. It sells the products at ` 500 each and makes a profit of ` 125 on each stick. The Company is producing 5,000 sticks annually by using 50% of its machinery capacity. The cost of each stick is as under: Direct Material ` 150 Direct Wages ` PAPER – 3 : COST AND MANAGEMENT ACCOUNTING 63 Works Overhead ` 125 (50% fixed) Selling Expenses ` 50 (25% variable) The anticipation for the next year…