wo pr rman 9 dle 9 0 wr a Searrerees f on oo UOTONRSD aod « Yoon Hise ‘ap ageged woe: ‘ond oppo wy = = 3 = oe a 5 me| 2 7 guilt Pate a ql L tail int et H H et iH Hite il yl iar Ee Hae Hu je aii re Hill HAY i i li ee ii ue bith 1 Hae [ EE iz Hi el 1 ial rit i tH lee uae tu iH sa Hilal ft 1 Ue a i al we ih He II 4 . ae Hi I ti had WG Pind d ya i ult adi di day ie fil 3 aud a 25s 4 i A nt Wilk ia He yee | ail fa yy | ane aa tinCerting as Als in Decision Making ‘Atel cr stp athe two rable tciges ud for ‘te ‘ ‘ican afford VarableCorting and Diterentiat Nuiabe or mtsnal costing ang shorter burns decane? Product, This tem is in the production of « ‘Appropdate ‘we oft ena cost, or erting’ a raw material into fished soa sion and ‘actory an managerial decsone coat 4 th taal cont ofc 1 of dict lous the comin mai1 dl ay i uy 832 Ny i iy B ti fesse Hit Ht al a i ii: HH i 5 HH Hilt Hat HY it HS hay if] i ie i ih tH i i sll i ui Hlut fue il el HI ip aulit Ua i i Ha HE HTH Ba if Het rll ae a il flute i Ht i Hd jl fn ee Tie : ih i LA LA i i uu iH itt ag id 4 i Hl fl uf ny : tl i iil per ae il jai a hehe i : des dat q feed Ae i a ee uit ig Ae re Ti l Hifi Hi lean ft ; ny E aaa wl i tae H iy HoH Inde tie : Heskia h TEbe fain matt at below noral pit or blow total con wis Pl ca concbution wha tach lr te pe heh C geek oi sin etn hn E ee ak fot, Schl ching cn, ado enya, ere Fo a Fp Th cna ay ‘ettnine Fathom export oie? coe ty oa tt Uh er ty bon gore, engin Js determining prof from exert onder Rk acted fom como ade in conrbot 0) to (© Ethancement in company mestige and goodwill, (@) Employment opportniticn ‘a* sal sd ob ceed at web: pt cap tetsed 9 eee ‘the component part is put to some alternative use or not. z aeration 62 ‘omarion. ut wie cons € 6.25 tah conponest 22 tan sre in he matt a0 5.75 ech win tse of one pyre Materials Labour ; yeni a te al com (oul yu ab tay Seer ree () what would be tere a ©) wae ‘our decison ifthe supper re NT ay Seton. : The rate com of producing the components shown bon:econ mats f ‘Statement Showing Comparative Profitability et ars } = ‘Contribution ‘tanned Ratan Profit i. } ime ee | poe iframe an a Tan | ae em aa 51,200 77200 70,000 37.200 “Concusion, The sles mix (ii isthe most profitable as it yields the highest amount of contribution and profit. (0) When there is a Rey factor ‘ “hes kay factor is operating, selection of the most profitable sales mix is based on contribution : ® fe yesh von per to A,B ana € 2, € 4 and 8 Tne mmber fey aor opting sinaltaneouly, hbase eine em he sane at vba at 3,000 ad € 30 per ut apa prcblen comer nore then atta dO bast voto Linear Mogamming to Sternie ‘ivltn jet Ba Cane poo on tut’ Le opt pac ia im) as Maseton 66 : ‘A oapry manacures hme product: Te budgeted quant, ling pies and unit coat Marginal Cost Statement asunder : P on be aw materia (@ € 20 per) Direct wages (@ © 5 per hour) Vasile oeheats Fired ovabeade - ‘Budgeted production (in nits) Selng pice per nit (in €) * equiva = Peale (0) Prevent a statement of budgeted profit. (19 seminal oct cad determine the pot, ithe supply of ow mata i vestrcted to 18,400. (com. Hons. Deli) eaeey, Beco. 2haieiieiiale debe 41-1 ceeetiieli| «| (uilitiseijetl Hi Hh auc aa meee tes a ev Bed ape) bean mal, Py Ata ul itt if y He ree il oe ue Ut rat i t FEET Hy Ht Hh i \ lit i ih ely Hi Heat Sieh abi We Nie ‘0 ther words, diferent cost 35,0). exanpl ie sdditional output vr fixed cost to be so rane ade a at ett a a eh gealadchennts aca esos acsamn tekstas 16,000) and is thus, acceptable. Ditferential Cost Analyais Vs, Variable Costing As sated ear, differential cost may be synoymous with variable cot mares : techniques a ata a nhs mow comprehenie technique of differential 2: w for 2.500 nits 16 © 16,000, Tt costing. These two SPSS tei one reapers bt doa in cenain otha els, The pts ot nonaty Sintartes 1 Both he tacniqnes ate based onthe section of {to nt ange te erat cx and aac et we the cen ee | 3 bth yet adabl coning techie of cnt analy and petition —_ 3 Both the techniques are used by the ‘management in decision-making and formulating 20,000 In fact, the theory ofagement Acuntng + tale ays cn be mae te ae of oth sot cnig ml a le DECISTON MAKING AND DIFFERENTIAL COST ANALYSIS Many managerial decons involving problems of alternative choles ae ferential ot aap. Sach dessins he elowing =U MY Mae mth he Dy of ' 4. Determination of the Optimum Level of "Dilferental Cont Avalyle SIP k Peta ection mach ans EE HE tu eis tater fraction nse | 1" Determining optimum level of pro: ' ‘oft the maximum. In ererto area dedon | ducuons ay 5 oninigMusration 67, here bulk fer fo expr 0 pie per on fo ble a cavacy ere te maxima pt rote ind the pce gute ln ac he tera le, ‘ Siferentil cont equals or excels ne : i ‘ncemental everne i sb ore poBtble io ienaze the won of ont, Sota a ‘Mustation 6.7 si ae Thies tote ——pea es é ‘A company has» capacty of producing 00,000 units of «cin paduct is mnth The les (oncom wis) rer” (050 ets) parent reports thatthe lowing sede le pci ple (i a) Yotume of production Selig pre pr wnt © = e « ae andy 0,0 ante 30 ‘ete cot @ 15 pe pene 2080 0 1s af At 70% capacity 70,000 wnts oso ie ot amo a ‘oso g Ae 60% capacity 20,000 units os alt awe Ta ‘sae i At 90% capacty 90,000 units os7 see some 008 0 ‘At 100% eapaty 10,000 unite ost lt 100 780 se Vac cost of mamufctate i 15 pase per unt and total fed cost € 40,00, TE abe wp he ul lle, @ 050 per wnt rhe lace acy of 2,00 # Prepare a statement showing ineremertalrerence and diferent cost of each stage At wich (Ge, 1.0000 ~ 80000) for expor ant wi esti an ince of pot by € 7.900, rolame of production will the pret be maximum ? |Pectin Maing (i) Wha be your ame # xen orders at € 828 par unit stan of © 9 pera) fr» fre (9a i you mr tn of ep em re to ke na pe Saas ae (com a i soto “es (0) Satement of Maral Cnt a tt er he et 220.2 ‘le s se stow Dec ate (3.50 68) anata Dirt wages (128 » 28) 0 ace ‘ata retbead Poy aa ee -e cam se ‘ ‘nl ot 38 sas onnin (als = ibe ct) 74 ed ct asst rte ane ‘ateiion of Hand ort cor eretad — 40000 an @ T Sat8e € 147.10 St cretind — S900 unis @ Be 40 = £36,000 Jase Ae 20% tee 238 Pond cot asa Sutement ef Pre Recommanation (Fr 2.00 on) ¥ Marfa cart (€ 385 « 2000 at) sane ‘adnate eq (167.300 ~ 1.68230) sa2s0 "peas mse Tas Saag pte per elt (225.950 + 20,000) «©1330 (Ape) (0) () Toe export oder shouldbe acaped Benue the export pice of 9 snore than ve ‘ost of ® 8285 par unit. The aceptance of is export onder wil make an dita contbution (et ‘profit of € 18,480 (Le, 9 ~ 8.35) = 3000 eit, (i The export areca 8.25 wil rnin a os bea es han the rafal cs, Since ‘the amount of le ent srBean, he exper one shoal not be outgy wed bt management. should conier accepting Qh et for now ot cnsertons, ath a ating of fergn exchange, ‘echancement in the good ofthe company bease of export howe stat et. 5 ‘emda mu ee ooo Jo Apne amd J 405Problem 6.4 (Bort Order) ‘company curaty opting a 8% capaty has the flowing prs oni with the domestic sales ony (a at present, ot ‘aoscty between reset and dowetic ser and fim amy exe SASS a et to tore ow deh Sant sgn See a Setation A le IOP i 7 7 = E oat etal en coe Sea Cimears “ame. amates E = ejonmety oat ly , free ions E * e sesecom oso sso f a Peres ian 5 aes oo aa § 10,00,000 12,50,000 16,28,000 r coos onan 0 i tno 2sems sn i 908 ‘none ‘sas f sano ‘neva ston % +13,00,000 13,00,000 14,009,000 Gencaen Atcatve HI he best ecee Wes im the highest amount of pet. sof at {208 eed on he iat naar nares at "Tha, bur cs fr aerati ahs ot ad wae vad a 008 an ‘wha ls eaeecon, Te ode ould wok Be A2epled as woul iv Tans ETS, Probem 6.8 (Bort Order) ’ company sling elect ts a a cost of © 6,900 each, made up a8 under: Diet mates e Fey s elimi Cente excise duty (a) A orig buyer has offered to buy 200 such its at © 5,000 each As a Cot Aso you ase accepting this offer. Z (8) What pice shoul the company quote for at to be purchased bya company inaagenent if should beat cost punta, would der he sme (es. Inter) een Hing Sotetien (©) Mec pr compte afm ‘he Genel Manager sugges to seduce sling prices by ional otome of Ss. There is sufient manufactarig capac. Drogtanme wil lave aditenal cots of € 50,000 ft roducion Feceavary to open an ational sales fice at cost of € 300,000 ‘The Sales Manager, onthe other hand, suggests to increase sling ceatinted to redace alee ylume Dy 10%, At the sume time, saving = manufacturing é £ el 0 “aco Seams oveicds at € 50,000 and € 00000 pec annum respec Is epee on ‘edaced volume. wh ofthe to pops woul you crt and wh? (Em eu DM LEIA. te)“ 08 comps ceyted a vsale ot pus pet ones shold D2 rotten 88 ‘A company prota g predaction and sale is 40,000 units Der cs eran eset ad eect e an Ut | eae a taba present the cnt of the abure proposals advice on the proposals. en Jr! one tine order to sell 25,000 components fr which Ss (if Bie eae |s sli 8/8) a|se mut ‘he pucase manager hasan fer fom a super whois wing to suply te comport at € ss he emponent be pachused an prdaetion topped? ca SEI AE te tte pion a are yt Sey t5 (as 60) per ne ony ent ar @ 15, 4, € 1.0006. Th rl et he tain ‘acto the manfacace a he ne pode tnd the compat: rssty beg mastic soa ‘Se bocgt fom sute Ts il rete atonal poof €1,50,00. Problem 6.13 fake of By Decson) FY id marfactes ats ar. The flowing cats ae scared fr prcetng 1.00000 wats ox conjonert ieee mate cost ans ‘ire abr cost als ‘arabia factory eerend tas Esta ‘he porhave rice of the component i £22, The xed everand wou contin to need een when te component booghs fem cutade although thee woul be rdution to th net of 2.00000, ‘equ (A) Shon the par be-made or bought, xisldrng thatthe pent facity when rue fling a buying deen wold remain ie? {2} eave the veleasd capac. can De rested out te another compan far € 1.000, wat woud Ye the decison? (es teh Solution ; Mice (c) When rlevedcapacty wil remalt a, visable cots to mabe the component pinct mieesi es ikeof mating coupay,& crtaln component 8 Sotuct in ax engineering COBPRPy, er eit arotaee te component fal oF uh itt sen ae the component carey worn {2 La Semceean ovtsppiats ce eee Try canon bo os toca he PUL ‘he managenent of te company? est bution foregone © 10 per hour ‘You ae required to advise whether : “G) The company should continue to purchase the bells from outside supplier or should make them inthe factory; and (1) The company should acept an order to supply 5,000 bells to the market ata sling price of 1450 per unit ? © setation (0) Natedial cost labour eort ‘arable overheads 100% of tabot Tal Variable Cost mt Baa Saving if mamfacured ie the ky taco smansatre ‘SGN RIGIRE, me comment 3 sal be ware by Saving per annum, if manufactured (0.50 x 20,000) Mee tly Hence, the company should make them in the factory # hat:2 ? aa ‘ pun sands pape ne Y 2 x rat nog a9} ep adine poe pen woes 2 mee oe sa edie) BH: ante (lel i vier tLe k diet fF il! —eae Gee ty eat Ascaatnt of «company running an ecard with legate ppg of ious, poets tas Boa ud vet ov spn he ee ts ticle etn fae ‘apenas, which wold vin waximaton of pts, The campy contempt sevos HPP, lemons. sang and pence,Fe Tsx0.0 ‘tems but not items Sa ans a she ven oe tig ames ‘eblem 6.24 (Seles Mt and Key Pot) “hme is yout racommention for oad ix of yrodetion fo the coming yu. Te cutent aca en ble “working Note Ta uses alte to A and is 45, in, 25 + 20, out of which minimum aiea ie 4 and 5 acres fot A snd Since contribution per acre per A is more than B. The remaining 36 acres are alloted to A ‘Silay ttl are alloted'ts Cand D is 55 acs, Le. 30 + 25, ost of which minimum aces it 6 a8 3a far€ and D respec, Since D i more poftabe than ¢, the romaining 48 acres are allotedaaihes YE at = aei i E \ 4 g se i Hh (rast Si eonspraqae paxy yoormppy 07 opRRUWeS 8 [ORE (52 096 2 o00:8 Beet {oie [HRY 7 onneeaaeS WEP "a papal je wonoapod OOTP A oereinere nr et 05'yIEORIPPE De GRY ( (952 + 09° a = ooo) progiue agrsts, io oe i ese ato a = esa Ween 21 3 © run ope) a penta os ae omi if igiy i tin its = Uf [if i) | F pige ae! I : ; Oe ts at iy Ey fe des. elf ettiesei if F Ti { Raves Vall ceseng oe pt FEET See mad peat (etn) 0Consibui | [| f fie =a | Recauur arate sansa sie a alle 3 3 RTGS Set mn EMail a a 4emalllt bie a Urlag lle halide ale | ie ali lie ale de BRE HEAa i i fil BE 3) 3 i i z @(27¥ ae (Rt ae ot meh ae eng pet he esion a 22.80 mde by fl gb ri Nae yl be equal tthe amcune of Fis cont ©7500 ape ‘Problem 6.40 (Differential Cost Analysis) ‘The flowing extract ae taken from sales budaet of s company for x caren yeu: apes 000 ~ ler 4,000'yits @ © 25 per anit ff em Accountant's conclusion? Argue with your ews on the basis of data, (Lema. ner) cea oy ot € 3.00 per yur foetal ine sana wang taviag erp dl faces Pee,DeclenMaing Sagoo spas mew aa ae mee a aste at % Blom ane Det) ‘Scuntanee unde whch sting Delow mayan cot ay be tf, (atom. dns, De) 7 De yo thinks 4 pducer can sell is output eenbelow vale cot? tae, Sroeanecee he le of contrat in maga cng ad tment econ cling prices, eee oes might justity the fixation of ‘aga com (ese) ‘s ifr cating ? Explain st importance in decor making. (Bom. Hons. Delhi) is meat by Difleenta Cost Araipus? Explain the een features and poats of siniarty ‘erence Netmen Dferemtiat Cost Analy and Mario! Caring. 16, What do you understand by em cane) —| tata nt costing, and (b) its practical applications (Bom. Andhra) ) \ 3, Ses ne ot gS at wet ya al : ‘Practical Questions: \ ‘of pocket cot. \ Ta Ty ai Aan Yl 8 py i ein ee nj tc ee Te ead Diet material total of aise labour and factory overheadeee a aairiene ee Eatin acetone ot eae = cont a aoe re ee eee sre saa ma at