SUGGESTED ANSWERS OF COST AND FINANCIAL MANAGEMENT IPCC NOVEMBER 2011

 COST & FINANCIAL MANAGEMENT

NOTE: TOUGH ANSWERS CAN BE EXPECTED FROM INSTITUTE

Q 1

   a)

      i) BEP 300 UNITS

     ii)sales 375 units

  b)

     i) Rowan 1890

     ii)emerson 2190

  c) rate of return – 33%

  d) WACC -9.92

2

   a) Supplementary rate – 4

       costing p & l Dr 120000

       finished stock Dr 20000

      work in progress Dr 20000

              to o/h absorbtion           160000

  b)

      i) quick ratio - 0.88

      ii) debt equity ratio – 0.5714

      iii) return on capital employed 27.27%

      iv) average collection period – 45 days

3

  a) equivalant production

      material – 174800

      labour and o/h  – 169800

         ii) cost per unit 7

     b)

        i) EPS – 11.06

        ii) combined leverage – 3.0379

4.

   a) operating cycle – 100 days

       working capital – 48611

   b) stores ledger balance – 25200

        costing p & l loss – 1800

6.

   a) i) ARR machine X – 42%

          ARR machine Y – 35%

     ii) equated annual NPV –

                      X – 44422

                     Y – 56878

   b)

     i) MCV – 45000(A)

     II) LCV – 3400(F)

    iii) fixed o/h cost varience – 5000(A)

   IV) 5000(A)

                                                               PREPARED BY,

                                                                     SUDHEESH T S

                                                                     MOB; 9961524969