24
06
(c
Sun Ltd. Makes a single product which it sells
for 10 per unit. Fixed costs are 8 48,000 per
month and the product has a contribution to sales
ratio of 40%. In a period when actual sales were
1,40,000. Sun Ltd.'s margin of safety, in units
42.
Was :
12000
Wool
2
4
(b) 6.000
Answers
Answer:
Step-by-step explanation:
Choose the most appropriate answer to the following questions giving justification. Each
question carries 2 (two) marks. 2x10=20
(i) Stock Control data for Material P are:
Annual usage: 3600 units; Cost per unit: `100/-; Cost of placing an order: `40;
Stockholding Cost: 20% of the overall stock volume; Lead time: One month
The EOQ based on the above data is:
(a) 210 units
(b) 175 units
(c) 90 units
(d) 120 units
(ii) Which of the following would take place if a company is able to reduce its variable
cost?
Contribution Margin Break-Even Point
(a) Increase Increase
(b) Decrease Decrease
(c) Increase Decrease
(d) Decrease Increase
(iii) The following details relate to Product P-1 of a manufacturing company:
Level of activity (units) 1000 2000
Cost per unit (`):
Direct materials 4.00 4.00
Direct labour 3.00 3.00
Production Overheads 3.50 2.50
Selling Overheads 1.00 0.50
11.50 10.00
The total fixed cost and variable cost per unit are:
Total Fixed Cost (`) Variable Cost per unit (`)
(a) 2,000 7.00
(b) 2,000 8.50
(c) 3,000 7.00
(d) 3,000 8.50
(iv) A company makes a single product which it sells at `10 per unit. Fixed costs are `
48,000 per month and the product has a contribution to sales ratio of 40%. In a period
when actual sales were `1,40,000, the company's margin of safety in units was:
(a) 2000
(b) 3000
SUGGESTED_ANSWER TO QUESTION_SYL2016_JUNE2017_PAPER-15
Academics Department, The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 2
(c) 3500
(d) 4000
(v) The following tasks a
Concept Introduction: All businesses run in Profit and Loss.
Explanation:
We have been Given: Sun Ltd. Makes a single product which it sells
for 10 per unit. Fixed costs are 8 48,000 per
month and the product has a contribution to sales
ratio of 40%. In a period when actual sales were
1,40,000. Sun Ltd.'s margin of safety, in units
42.
Was :
12000
Wool
2
4
(b) 6.000
We have to Find: The Correct answer.
A margin account is a loan account with a broker which can be used for share trading. The funds available under the margin loan are determined by the broker based on the securities owned and provided by the trader, which act as collateral for the loan. The broker usually has the right to change the percentage of the value of each security it will allow towards further advances to the trader, and may consequently make a margin call if the balance available falls below the amount actually utilised. In any event, the broker will usually charge interest and other fees on the amount drawn on the margin account. If the cash balance of a margin account is negative, the amount is owed to the broker, and usually attracts interest. If the cash balance is positive, the money is available to the account holder to reinvest, or may be withdrawn by the holder or left in the account and may earn interest. In terms of futures and cleared derivatives, the margin balance would refer to the total value of collateral pledged to the CCP (central counterparty clearing) and or futures commission merchants.
Final Answer:
A margin account is a loan account with a broker which can be used for share trading. The funds available under the margin loan are determined by the broker based on the securities owned and provided by the trader, which act as collateral for the loan. The broker usually has the right to change the percentage of the value of each security it will allow towards further advances to the trader, and may consequently make a margin call if the balance available falls below the amount actually utilised. In any event, the broker will usually charge interest and other fees on the amount drawn on the margin account. If the cash balance of a margin account is negative, the amount is owed to the broker, and usually attracts interest. If the cash balance is positive, the money is available to the account holder to reinvest, or may be withdrawn by the holder or left in the account and may earn interest. In terms of futures and cleared derivatives, the margin balance would refer to the total value of collateral pledged to the CCP (central counterparty clearing) and or futures commission merchants.
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