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    MA Test 1

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    This document contains a practice exam for a postgraduate management program. It includes 5 questions related to management accounting concepts like contribution margin, breakeven point, operating income, and profit/volume ratios. The questions provide financial data for various manufacturing and service companies to calculate key metrics and determine the optimal choice between investment proposals or production levels.

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    MA Test 1

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    139 views2 pages
    This document contains a practice exam for a postgraduate management program. It includes 5 questions related to management accounting concepts like contribution margin, breakeven point, operating income, and profit/volume ratios. The questions provide financial data for various manufacturing and service companies to calculate key metrics and determine the optimal choice between investment proposals or production levels.

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    This document contains a practice exam for a postgraduate management program. It includes 5 questions related to management accounting concepts like contribution margin, breakeven point, operating income, and profit/volume ratios. The questions provide financial data for various manufacturing and service companies to calculate key metrics and determine the optimal choice between investment proposals or production levels.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    139 views2 pages

    MA Test 1

    Uploaded by

    test twotest
    This document contains a practice exam for a postgraduate management program. It includes 5 questions related to management accounting concepts like contribution margin, breakeven point, operating income, and profit/volume ratios. The questions provide financial data for various manufacturing and service companies to calculate key metrics and determine the optimal choice between investment proposals or production levels.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    GOA INSTITUTE OF MANAGEMENT

    Sanquelim Campus, Poriem, Sattari, Goa

    Program: PGDM (BIFS) Exam: Test-1


    Academic year: 2020-21 Weightage: 30%
    Term: II Maximum Marks: 24
    Section: Duration: 30 Minutes
    Subject: Management Accounting Date: 08.12.2020
    Name of the instructor: Dr. Abhishek Ranga

    QUESTIONS

    1. Jain Manufacturing sold, 20,000 units of its product for Rs. 100 per unit in the current year.
    Variable cost per unit is Rs. 60 and total fixed costs are Rs. 2,00,000.
    a. Calculate (i) Contribution Margin (ii) Operating Income
    b. Jain’s current manufacturing process is labour intensive. Rahul, Jain’s production
    manager, has proposed investing in state-of-art manufacturing equipment, which will
    increase the annual fixed costs to Rs. 7,00,000. The variable costs are expected to
    decrease to Rs. 30 per unit. Jain expects to maintain the same sales volume and selling
    price next year. How would acceptance of Rahul’s proposal affect your answer to (i) and
    (ii) in requirement (a).
    c. Should Jain accept Rahul’s proposal? Explain.

    2. Cox and kings travel agency specializes in flight between India and Malaysia. It books passengers
    on Malaysian Air. Cox and kings fixed costs are Rs. 10,00,000 per month. Malaysian Air charges a
    passenger Rs. 20,000 per round trip ticket.
    Calculate the number of tickets Cox and kings must sell each month to (a) breakeven and (b)
    make a target operating income of Rs. 4,00,000 per month in each of the following independent
    cases:
    (i) Cox and kings variable costs are Rs. 400 per ticket. Malaysian air pays Cox and kings 10%
    commission on ticket price.
    (ii) Cox and kings variable costs are Rs. 200 per ticket. Malaysian air pays Cox and kings 10%
    commission on ticket price.
    (iii) Cox and kings variable costs are Rs. 200 per ticket. Malaysian air pays Rs. 500 fixed
    commission per ticket to Cox and kings. Comment on the results.
    (iv) Cox and kings variable costs are Rs. 200 per ticket. Malaysian air pays Rs. 500 fixed
    commission per ticket to Cox and kings. It charges its customer a delivery fee of Rs. 50
    per ticket. Comment on the results.

    3. A company wants to buy a new machine to replace one which is having frequent breakdown. It
    received offers for two models M1 and M2. Further details regarding these mdels are given
    below:
    M1 M2
    Installed capacity (units) 10,000 10,000
    Fixed overheads per annum (Rs) 2,40,000 1,00,000

    Page 1 of 2
    Estimate profit at installed capacity 1,60,000 1,00,000
    The product manufactured using this type of machine (M1 and M2) is sold at Rs. 100 per unit.
    You are required to determine:
    a. Breakeven level of sales for each model.
    b. The level of sales at which both the models will earn the same profit.
    c. The model suitable for different level of demand for the product.

    4. A company sell its product at Rs. 15 per unit. In a period, if it produces and sells 8,000 units, it
    incurs a loss of Rs. 5 per unit. If the volume is raised to 20,000 units, it earns a profit of Rs. 4 per
    unit. Calculate breakeven point both in terms of rupees as well as in units.

    5. Two competing companies ABC and XYZ produce and sell the same type of product in the same
    market. For the year ended March 2017, their forecasted profit and loss account are as follows:
    ABC XYZ
    Sales (Rs) 2,50,000 2,50,000
    Variable cost (Rs) 2,00,000 1,50,000
    Fixed costs (Rs) 25,000 75,000
    You are required to compute:
    a. P/V ratio
    b. Breakeven sales

    ALL THE BEST

    Page 2 of 2

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