JANAK COLLEGE
1st Terminal Examination – 2076
Level: BBS 4th year
Time: 1.5 Hours
Sub: Budgeting and controlling of profit
(b) Total sales in Rs. for earning profit Rs.1,70,000
Full Marks: 50
Pass Marks: 18
Brief answer questions:
(5 x 2 = 10)
1. What is profit planning and control?
2. What is the purpose of planning calendar?
3. Narayani suppliers produces and sells single product. It is estimated that sales for the month of
January will be 1,000 units and will be increase by 100 units per month. The selling price per unit is
Rs.500.
Required: Sales budget for first six months.
4. Sales plan summary for a product is as under:
Months
October
November
December
Sales units
10,000
8,000
6,000
Opening inventory for October is 6,000 units and closing inventory for December is 3,000 units.
Required: Production budget if company has a stable production policy
5. What are the objectives of sales planning?
Short answer questions:
(3 x 8 = 24)
6. A company produces and sells two different products X and Y. Annual sales for the last year 2010
was as follows:
Time
Product X
Product Y
January
2,000
1,000
February
4,000
3,000
March
3,000
2,000
2nd Quarter
12,000
6,000
3rd Quarter
8,000
9,000
4th Quarter
10,000
7,500
January 2011
2,000
1,500
The company estimates that the ending inventory for each month will be equal sales for next month.
The inventory of finished goods as on 31st December 2009 was 1,000 units for both products.
Required: Production budget for 2010
7. [A] Two production house doing similar business furnished the following budgeted data as
follows :
Narayani Ltd.
Bagmati Ltd.
8,00,000
8,00,000
Sales
2,00,000
Variable cost 4,00,000
6,00,000
4,00,000
Fixed cost 2,00,000
Profit
2,00,000
2,00,000
Required : Evaluate and compare the economic characteristics of the two company.
[B] A Multi product company provided the following information :
Products
Sales amount
SPPU
VCPU
X
10,00,000
20
16
Y
6,00,000
30
18
Z
4,00,000
15
10.5
Total fixed cost
Rs. 5,60,000
Required: (a) Overall BEP in Rs. and BEP for each product
8. Narayani manufacturing company is trying to replace an old machine with a new automatic
machine. The new machine’s purchase price is Rs. 82,70,000. An additional Rs. 10,000 will be
required to install it. It is expected that additional Rs. 20,000 will be required for inventory{Working
capital}. It will be depreciated on a straight line basis over 10 years with zero salvage value.
The old machine which was purchased two years ago at a cost of Rs. 84,000 has a remaining life of
10 years. It was also depreciated till zero salvage value. It can be sold today in market for Rs. 95,000.
It is expected that at the end of the life , Old machine can be sold for Rs. 15,000 and new machine for
Rs. 5,000 only. The company is in 40% tax bracket and capital gains are taxed @ 20%. If new
machine is installed it will increase the current sales volume by Rs.20,000 and also reduced
operating cost by Rs. 10,000 p.a. Will the company’s replacement effort be profitable if the
company’s required rate of return is 12 percent?
Comprehensive Questions:
(1x 16 = 16)
9. A company having three production departments and two service departments which produced
10,000 units of biscuit and 5,000 units of cake, furnished the following details related to its
production departments :
Products
Departments
Biscuits
Cakes
I
0.4 DLH
0.5 DLH
II
0.5 DLH
-
III
1.2 Machine Hrs
0.8 Machine Hrs
The standard service rate of Repair and Electricity departments are as follows :
Receiving Dept.
Service Departments
Dept. I
Dept. II
Dept. III
Repair
Repair
1 Direct repair hour for
5 Direct labour hour
0.5 Direct repair hour for
10units
0.3 Direct repair hour for
1 Direct machine hour
-
Electricity
2 Direct Kilowatt for
100 units
0.2 Direct Kilowatt for
1 Direct labour hour
5 Direct Kilowatt for
50 Direct machine hour
0.1 Direct Kilowatt for each
Direct repair hour
The budgeted overhead expenses for each departments are given below :
Departments
I
II
III
Repair
Overheads
35,000
38,000
25,000
13,200
Following are the material and labour cost required for two products :
Particulars
Biscuits
Cakes
Direct material
Rs. 8 per unit
Rs. 5 per unit
Direct labour
Rs. 25,000
Rs. 15,000
Other direct expenses
Rs. 15,000
Rs. 8,000
Required :
(a) Compute budgeted volume of activities for production and repair departments
(b) Overhead rate for production departments and for products
(c) Cost of goods manufactured per unit for each product
“Best Of Luck”
Electricity
71,200