Description
Assignment Sample Solution: Strategic Cost Management April 2024
NMIM$ Global Access
School for Continuing Education (NGA-SCE)
Course: Strategic Cost Management April 2024
Internal Assignment Applicable for April 2024 Examination
1) With the following information, calculate: (10marks)
a) Contribution
b) PV Ratio
c) BE Ratio (in no. of units and value)
d) MOS at actual sales of Rs. 9,00,000/-
e) Number of watches to be sold to get a profit of Rs. 18,000/-
Amt. in Rs.
Sale Price Per unit 10,000
Raw Material Per unit 5,000
Power Per unit 500
Factory Wages (variable) Per unit 1,000
Rent Per month 80,000
Salaries Per Month 1,00,000
Telecom and Printing Per month 45,000
Travel Per Month 25,000
2) Pritam owns a glass factory and is in the business of making cups and glasses. He gets an order to supply 20,000 nos. of a specific type of glass. The variable cost to make the
glass totals to about Rs. 45 per glass and the total fixed cost is Rs. 3,00,000.
How should Pritam price his glasses under:
a. Cost Plus Pricing to earn a profit of 10%
b. Variable Cost Plus contribution to earn a contribution margin of 20%.
Compare the results and discuss under what situation each type will be beneficial.
Which of the two methods will Pritam choose if he has surplus capacity to manufacture
the glasses without incurring any additional fixed cost. (10 marks)
3)
a) Divya went to Dhanalaxmi Bank to get a loan for her Business Needs. As the Loan
approving officer of the Bank, which ratios shall you look at to establish that it is safe to give Divya a loan, considering her capacity to repay the loan back along with
the interest? Explain any two ratios along with their formula.
(5 Marks)
b) With the following information, prepare the Budgeted Profit for the year for Company PQR Ltd. (5 marks)
UoM P Q R S
No. of Units
Nos. in
‘000s 20 30 40
100
Sales Price Rs./Unit 100 50 25 45
Variable Costs Rs./Unit 40 20 5 25
Fixed Costs Rs. 200,000
In addition to the above, each unit has semi-variable expenses of power, which are Rs.150,000 for all products put together and @ Rs. 10 per unit of production beyond it.
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