Description

1. Shubham Limited is in the business of Fashion Designing. It has received an order to  deliver  25,000  jackets  custom  made  for ABC  Ltd.  The  cost  estimates  for producing the jackets is as under:
2. a) Cloth 2500 reams of cloth@ Rs. 4000/- per ream
3. b) Threads and other decoration total Rs. 12,50,000•
4. c) Labour rate Rs. 500 per hour. Total hours required is 5000 hours
5. d) Factory overheads   8,00,000/•
6. e) Selling expenses (including delivery charges)   75,000/•

Quote a price per jacket  on the following basis:

1. Cost Plus 10% margin on cost
2. Variable cost + 20% margin
3. Target profit of Rs. 200 per jacket. Calculate the PV Ratio at that  price.
4. Shubham Limited has a good brand following and people arc willing to give up to Rs. 2500 per jacket. Shubham  prices  it  at Rs.  2400 per jacket.  What is this strategy called? (10 Marks)

2. M/s Priya Industries is in the business ofmanufacturing and selling lubricants. There arc 4 types of products. The information available about each:

The total cost incurred is as under:

It is  assumed  that the supervisor spends  time  in proportion  of no.of units  produced.

Calculate the cost of each  unit of the products  under:

1. a) Traditional Costing
2. b) ABC Costing      (10 Marks)

1. a) With the  following  information,  prepare   the  Budgeted  Profit   for  the  year  for Company XYZ.   (5 marks)

4 products  (P.Q.  R & S) are  produced by XYZ  Ltd.  The  labour  costs  are at Rs.   10 per hour of work.  Raw  Material  used  for all products  is similar  at Rs. 25 per kg. Factory  Rent  is  Rs. 1,00,000  and other  Overheads are at Rs.  20,000/-. Prepare  a Budgeted  Profit  and  Loss Statement for XYZ  Ltd.

Other information  is as under: