ou have been hired by ABC co and company is willing to allow you to structure

your pay. They have given you two options.

I Option 1: 80% fixed pay and 20% variable pay based on performance on

meeting and exceeding budgetary parameters. However, variable pay will be

restricted to the amount you can get upto 120% of budgeted performance.

II. Option 2: 30% fixed pay and 70% variable pay (Variable pay will stop at

140% of your budget)

Which option increases the risk for the company and why? (3 marks) (you will get marks

only for the proper reason based on the concepts you have learnt in the MA course )

3. ABC Bank has an budgeted average lending rate of 11% and budgeted average cost of

funds is 6%. Ignore capital. RBI has imposed a Cash reserve ratio of 5% and Statutory

liquidity ratio of 22% of net demand and time liabilities (total deposits). For the year

2020-21, they had planned to procure Rs. 20,000 crores of deposits. Actually they

procured Rs 25,000 crores and had an interest expense of Rs. 1,250 crores in the year

2020-21. They had lent Rs. 17,250 crores and earned an interest of Rs. 1,552.50

crores. Ignore all other costs and overheads. Solve this in excel sheet only and upload

Calculate the following:

a. Price variance

b. Sales Volume variance for sales

c. Input price variance

d. Input efficiency variance

(4 * 3 = 12 marks) Marks will be given only when you give the full formula and

mention whether it is favourable or unfavourable correctly. Marks will be given only

if the reasons are logical and make sense