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Strategic Cost Management
1. X Ltd has to replace its machine and the production manager has to decide between Machine A and Machine B. Machine A is having installation cost of 160 and annual electric bill 200. Machine B has installation cost of 760 and annual electric bill of Rs. 80. If both have life of 8 years which machine will you recommend if interest rate is 9 %? P/V factor @ 9 % for 8 years is 5.5348 (10 Marks)
Introduction
The resources available in a company are always limited. Managers make sure that they optimally utilize the same by investing the resources in projects which have higher payouts and can give higher profits. For this, the Net Present Value or NPV method is used which is an effective method to compare the costs and revenues of two or more projects with each other. The method helps to analyze the benefits and the costs which will be realized or incurred during the life of the project
2. A company manufacturing two products furnishes the following data for a year.
| Product | Annual Output Units | Total machine hours | Total No. of purchase orders | Total No. of setups | |||||
| A | 5,000 | 20,000 | 160 | 20 | |||||
| B | 60,000 | 1,20,000 | 384 | 44 | |||||
The annual Overheads are as under:
| Volume related activity cost ( Activity driver-Machine hours ) | 5,50,000 |
| Setup related cost | 8,20,000 |
| Purchase related cost | 6,18,000 |
You are required to calculate cost per unit of each product A & B based on
i. Traditional method of charging overhead and
ii. Activity based costing method (10 Marks) 600 Words
Introduction
Different costs are incurred to produce a final product. These costs determine that at what price the product will be sold in the market. However, when more than one product is being manufactured in a company, the different costs need to be apportioned on a certain basis among those manufactured. This segregation of costs among different products can be a difficult task if the process to
3. Following information is available from the books of ABC Ltd. As of March 31st 2020 a listed company.
a. Calculate the current ratio, quick ratio and debt equity ratio (5 Marks)
Introduction
A company needs to identify its liquidity position concerning the asset and liabilities it possesses. Liquidity position means whether Dear students, get fully solved assignments by professionals
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