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Email ID: smu.assignment@gmail.com

PRAKASH - 09741410271/ 08722788493

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 ₹ 80. If both have life of 8 years which machine will you recommend if interest rate is 9 % for five years. P/V factor @ 9 % for 8 years is 5.5348

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 60,000 120,000 384 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

3. Project X Involves an initial outlay of Rs 32,400.Its working life is 3 years. The cash streams are as follows

Year Inflows ₹ P .V Factor @ 14% P .V Factor @ 16%

1 16,000 0.877 0.862

2 14,000 0.769 0.743

3 12,000 0.675 0.641

Calculate:

a. NPV at 14 % & 16%

b. IRR

Need Answer Sheet of this Question paper

WWW.MBAASSIGNMENTSOLUTIONS.COM

Email ID: smu.assignment@gmail.com

PRAKASH - 09741410271/ 08722788493

WWW.MBAASSIGNMENTSOLUTIONS.COM

Email ID: smu.assignment@gmail.com

PRAKASH - 09741410271/ 08722788493

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 ₹ 80. If both have life of 8 years which machine will you recommend if interest rate is 9 % for five years. P/V factor @ 9 % for 8 years is 5.5348

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 60,000 120,000 384 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

3. Project X Involves an initial outlay of Rs 32,400.Its working life is 3 years. The cash streams are as follows

Year Inflows ₹ P .V Factor @ 14% P .V Factor @ 16%

1 16,000 0.877 0.862

2 14,000 0.769 0.743

3 12,000 0.675 0.641

Calculate:

a. NPV at 14 % & 16%

b. IRR

Need Answer Sheet of this Question paper

WWW.MBAASSIGNMENTSOLUTIONS.COM

Email ID: smu.assignment@gmail.com

PRAKASH - 09741410271/ 08722788493

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