Strategic Cost Management

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NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Cost Management

Internal Assignment Applicable for December 2023 Examination

Assignment Marks: 30

Instructions:

All Questions carry equal marks. All Questions are compulsory

All answers to be explained in not more than 1000 words for question 1 and 2 and for question 3 in not more than 500 words for each subsection. Use relevant examples, illustrations as far as possible.

All answers to be written individually. Discussion and group work is not advisable.

Students are free to refer to any books/reference material/website/internet for attempting their assignments, but are not allowed to copy the matter as it is from the source of reference.

Students should write the assignment in their own words. Copying of assignments from other students is not allowed

Students should follow the following parameter for answering the assignment questions

For Theoretical Answer

Assessment Parameter Weightage
Introduction 20%
Concepts and Application 60%
related to the question
Conclusion 20%

For Numerical Answer

Assessment Parameter Weightage
Understanding and usage 20%
of the formula
Procedure / Steps 60%
Correct Answer & 20%
Interpretation
  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:
    1. Cloth 2500 reams of cloth @ Rs. 4000/- per ream
    2. Threads and other decoration total Rs. 12,50,000/-
    3. Labour rate Rs. 500 per hour. Total hours required is 5000 hours

 

NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Cost Management

Internal Assignment Applicable for December 2023 Examination

  1. Factory overheads Rs. 8,00,000/-
  2. Selling expenses (including delivery charges) Rs. 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 are willing to give up to Rs. 2500 per jacket. Shubham prices it at Rs. 2400 per jacket. What is this strategy called?

(10 Marks)

  1. M/s Priya Industries is in the business of manufacturing and selling lubricants. There are 4 types of products. The information available about each:
P1 P2 P3 P4 Total
No. of units
produced 1300 2000 1500 1200 6000
Labour Hours 250 350 200 200 1000
No. of units in 1
packet 2 5 3 3 13
Machine Hours 260 450 360 180 1250

The total cost incurred is as under:

Fixed Costs Rs.
Salaries and Wages 2500000
Supervisor Cost 75000
Factory Overheads 1000000
Packaging costs 600000
Total Costs 4175000

 

NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Cost Management

Internal Assignment Applicable for December 2023 Examination

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. Traditional Costing
  2. ABC Costing

(10 Marks)

Q3.

  1. 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:

UoM P Q R S
No. of Units
produced Nos. 50 45 80 90
Sales Price Rs. Per Unit 700 700 900 950
Labour Hours Hrs. per unit 10 12 8 4
Raw Material Kgs. per unit 6 5 10 12

 

NMIMS Global Access

School for Continuing Education (NGA-SCE)

Course: Strategic Cost Management

Internal Assignment Applicable for December 2023 Examination

b) The following is the Profit or Loss statement of SRT & Co. (5 marks)
25000 @ Rs. 50
Sales p.u. 1250000
Variable Cost
Raw Material 250000
Labour 345000
Variable Overheads 150000
Fixed Costs 400000
Profit 105000

Calculate:

  1. Contribution per unit
  2. PV Ratio
  3. No. of units to be sold for earning profit of Rs. 70,000/-

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