1. Anil enterprises , a single product company furnishes the following data

Product	Year I	Year 2
Sales	24,00,000	?
PV ratio	40%	30%
Margin of safety	25%	40%

While there was no change in the volume of sales in year 2, the selling price was reduced. Calculate the sales, fixed costs and profit year 2.

Question no. 2

Sumit Enterprises has prepared budget estimates for 2016-17. It is a multi product company with budgets given for 2 products.

	A	B
Sales units	6000	16000
	Rate per unit	Rate per unit
Selling price	50	74
Direct material	22	32
Direct wages @ Re. 1 per hour	8	12
Variable overheads	4	6
Fixed overheads	8	12
TOTAL	42	62
PROFIT	8	12

The plant is at present being used at 2/3^rd capacity. After finalization of budget estimates it was observed that 1/3^rd of the production capacity was still idle. In order to improve the performance the following proposals are received

1. Discontinue product A and the capacity so released would be utilized for the production of product B. In that case the selling price of Product B has to be reduced by 4 per unit.

Question no. 3

Samir Enterprises. with a good track record and quality product had a record sales volume in 2020-2021. But at the end, it realised to its surprise that gross profit had dipped considerably . On a review the management decided that, the selling price would be increased by 10% w.e.f. 1/4/2021. Simultaneously the post of factory manager, which was lying vacant for some months, was filled up and the new incumbent was entrusted with the task of reducing costs.

PARTICULARS	2020-2021	2021-2022
	in THOUSANDS
NET SALES	52.50	67.50
COST OF GOODS SOLD	47.25	54.00
OPERATING PROFIT	5.25	13.50

During your review a controversy arose between the marketing manager and the factory manager. While both agreed that increase in operating profit was mainly attributable to the hike in selling price, the marketing manager insisted that the increase in operating profit was mainly due to increase in volumes compared to increase in operating profit due to savings in factory cost, the factory manager thinks otherwise. You are requested to intervene and settle the dispute.

Question no. 4

Tara Enterprises is organised into two divisions namely A and B. Division A produces three products, P,Q, and R. Data per unit are:

Products	P	Q	R
Market price/unit	240	230	200
Variable costs/unit	168	150	140
Direct labour-hours / units	6	8	4
Sales units	4,000	2500	1500

Division B requires 1000 units of product Q for use in one of its products.

Required:

Determine the transfer price which Division A should charge for its supplies of product Q to Division B if the capacity of Division A is

1. 58000 direct labour hours

70000 direct labour hours