To General Reserve
To Proposed Dividend
To Balance c/d Rs.
15000
2000
8000
15000
4000
3000
12000
4500
15000
80000
241500
400000 15000
75000
196500
286500
By Gross Profit b/d
By Profit on Sales of Fixed
Assets
By Dividend received By Balance b/d
By Net Profit for the year
By Tax Refunds Rs.
370.000
20000
1000040000025000
241500
20000
286500
3. What is CVP analysis? Does it differ from break-even analysis?
4. S Limited is considering for purchase of a machine. There are two
possible machines which will produce the additional output. Details of these machines are
as follows:
Machine x Machine Y
Rs. Rs.
Capital Cost
Sales at standard Price
Costs:
Labour
Materials
Factory Overheads
Administration Cost
Selling Costs
Expected life in years 60000
100000
10000
8000
12000
4000
2000
2 60000
80000
6000
10000
10000
2000
2000
3
Other Information:
(a) The costs shown above relate to annual expenditure resulting from each machine. Sales
are expected to continue at the rates shown for each year for the full life of each machine;
(b) Tax to be paid may be assumed at 50% of net earnings;
(c) Interest on capital is to be ignored;
(d) The appropriate rate of interest for converting to present value may be taken at 10%.
On the basis of the facts given above show the most profitable investment by the following methods.
(i) Pay-back Period
(ii) Return on Investment; and
(iii) Net Present Value on Investment.
3. In the long run there are no fixed cost functions (total or average) since no inputs are fixed. Explain how this helps a producer in making his future decisions.
4. Describe a Cartel. How the pricing decisions are arrived at?
5. Write short notes on the following :
a) Delphi Technique
b) Economic Profit
c) Multipart pricing