Strategic Cost
Management
Q1. Mr. Manish comes
to know about the need of analyzing the financial statements. He is keen to
know about the concept of ratio analysis from you as a business consultant.
Discuss about the term ratio analysis.
State all the ratios
under inter-statement ratios analysis,
Describe any of the
four ratios relevant with inter-statement ratios (10 Marks)
Q2. Armani Brothers
received an order of supplying 100 mattresses, on a monthly basis to one of
their client located in the Mumbai Suburbs. An additional equipment of Rs100000
will be required for executing the order.
|
The cost details in relation to the order is
as under |
|
Consumables 120 kgs @Rs 600 per kg |
|
Thread and glue Rs100 per mattresses |
|
Packaging cost Rs250 per piece |
|
Labour hours – 100 hours of which
2o hours paid as overtime |
|
Labour rate Rs 100per
hour |
|
Overtime is paid at
the double of the rates |
|
Overhead paid for
the month Rs20000 |
|
Selling and
distribution expenses Rs15500 per month |
The manager of the
firm mentioned that the firm will, need additional working capital to the
extent of 70% of the sales amount to be realized by selling the 100 mattresses
The management is
looking forward to earn an expected return of 25% on the additional capital
required for accepting the order. Prepare a cost estimate and indicate the
price to be quoted to the customer (10 Marks)
Q3a. You being the
manager of Amol Manufacturing P Ltd wants to implement costing system in the
proposed manufacturing unit to be located at Silvassa. You are concerned about
which of the two methods – traditional costing and ABC System, to be employed.
These two methods are
different when it comes to allocation process, cost objects and so on. You
would like to understand the points of difference between traditional costing
and ABC System from Mr Mehta your professional colleague so that you can decide
effectively.
Mr Mehta covered five
major points of discussion on this. Discuss what you recollect as difference
between the two systems ( 5 Marks)
Q3.b. Following is the
data available for one of the existing manufacturing unit, located at Surat.
Allocated the overhead cost under the ABC system and discuss the steps for
allocation of such overhead cost
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