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Accounting for Managers
Notes Fill in the blanks:
4. Desired profit is a profit level desired by the firm to earn at the given level of .........................
5. A ............................... decision is possible when the various factors, and relationships between
them, are measurable.
6. A .................................... involves the act of choice and the alternative chosen out of the
available alternatives.
7. ................................. describes the process by which a course of action is selected as the way
to deal with a specific problem.
8. If a machinery is required for a specific project and after that project there is no use of the
machinery then company can decide to ........................... the machinery for that project.
13.9 Review Questions
1. A refrigerator manufacturer purchases a certain component @ 50 per unit. If he
manufactures the same product he has to incur a fixed cost of 20,000 and variable cost per
unit is 40 when can the manufacturer make on his own or when he can buy from outside?
When the requirements is 5,000 units, will you advise to make or buy?
2. From the following data, which product would you recommend to be manufactured in a
factory, time being the key factor?
Particulars Per unit of Product A ( ) Per unit of Product B ( )
Direct Material 24 14
Direct Labour @ 1per hr 2 3
Variable overhead 2 per hr 4 6
Selling price 100 110
Standard time to produce 2 Hours 3 Hours
3. The following particulars are obtained from costing records of a factory:
Particulars Per unit of Product A ( ) Per unit of Product B ( )
Direct Material 20 per Kg 80 320
Direct Labor @ 10 per hr 100 200
Variable overhead 40 80
Selling price 400 1,000
Total fixed overheads 30,000
4. A factory engaged in manufacturing plastic buckets is working at 40% capacity and produces
10,000 buckets per annum.
The present cost break up for bucket is as under
Material 10
Labour 3
Overheads 5(60% fixed)
The selling price is 20 per bucket.
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