15 Coverage of Questions in Padhuka's Books Q.No. Topic Reference Similar Past On 1(a) Marginal Costing - Make or Buy Page 2.144, Illustration 11.5 NO2 1(b) Pricing - New Product Type/Strategy Page 3.10, Q.No.28 1(c) Target Costing Refer Principles & Illustrations in Chapter 9 1(d) Assignment - Interpretation Page 16.12, Illus.13, 14 M12, N 13, M 16 2(a) Marginal Costing - Max Price to Supplier Refer Principles & Illustrations in Chapter 2 2(b) Network Analysis - Reverse Working Refer Principles & Illustrations in Chapter 19 3(a) Learning Curve - Variance Analysis Page 20.13, Illus 14 and Page 20.15 Illus 17 RTP 3(b) Transportation - Least Cost Cell & North West Corner Methods Refer Principles & Illustrations in Chapter 17 4(a) Budgeting - Production & Purchase Various Illustrations in Chapter 7 Various Exams 4(b) Standard Costing - Variances Page 1.54, Q.No.31 M03, M 09 5(a) ABC - OH, BEQ with Step Fixed Costs Refer Chapter 8 (ABC) & Chapter 2 (Illus 6.6) N 06, N 11, etc. 5(b) Target Costing Page 9.17, Illustration 3 - Similar Concept 6(a) Transfer Pricing - Import Substitution Page 5.29, Illus. 18, Page 5.32, Illus.19 M 11 6(b) ABC - Customer Profitability Statement Page 8.36, Tilus.22 and Page 8.38, Illus 23 RTP, Inter Qn. 7(a) LPP - Interpretation Page 18.4, Q.No.10 M03 7(b) Pareto Analysis Page 3.16, Q.No.45,46 RTP 7(c) TOC - Classification Same as Page 12.1, Q.No.4 M 11 7(d) Budgeting - Theory Page No.7.4, Q.No.11, and Page No. 7.3, Q.No.7 RTP, N 04, M 08 7(e) Relevant Cost - Classification Refer Principles & Illustrations in Chapter 4 RTP, N13, N15 A B Question 1(a): Marginal Costing - Make or Buy 5 Marks A Company manufactures three components. A, B and C. These components pass through Machines P and Q. The Machine Hour capacity of Q is limited to 7,800 hours a month. The Company is interested in fulfilling the market demand to retain its market share. The following information is given: Components Demand (units/month) 1,200 1,200 1,500 Variable Cost per unit 187 215 111 Fixed Cost (at normal capacity utilization) * 115 * 115 *55 Hours Per unit: P 2 2 1% Q 3 Component B has to be made by the Company. There is a Supplier available for Components A and Cat ? 280 and 161 per unit respectively. 1. Which Component(s) and in what quantities should be purchased to minimize costs? 2. From a financial perspective, what do you need to ensure in order to justify your answer in (1) above? 3 1