MODEL QUESTION ENGINEERING ECONOMICS & COSTING (HSSM-3204) MODULE I OBJECTIVE TYPE QUESTION (MODULE I):1.

1. DEFINE ENGINEERING ECONOMICS. 2. DIFFERENTIATE BETWEEN MICRO ECONOMICS AND MACRO ECONOMICS 3. WHAT IS DEMAND FROM ECONOMIC POINT OF VIEW? 4. DIFFERENTIATE BETWEEN DEMAND AND SUPPLY? 5. WHAT IS LAW OF DEMAND? 6. DIFFERENTIATE BETWEEN LAW OF DEMAND AND LAW OF SUPPLY? 7. WHAT IS GIFFEN PARADOX? 8. WHAT IS VEBLEN EFFECT? 9. WHAT IS CONSPICUOUS CONSUMPTION? 10. WHAT IS INFERIOR GOOD? 11. WHAT IS DEMAND ELASTICITY? 12. DIFFERENTIATE BETWEEN PRICE, INCOME AND CROSS ELASTICITY OF DEMAND? 13. IF DEMAND ELASTICITY (PRICE) COEFFICIENT IS INFINITE THEN WHAT IS THE SHAPE OF DEMAND CURVE? 14. IF DEMAND ELASTICITY (PRICE) COEFFICIENT IS ZERO THEN WHAT IS THE SHAPE OF DEMAND CURVE? 15. WHAT IS THE SHAPE OF INCOME DEMAND CURVE IN CASE OF GIFFEN GOOD? 16. WHAT IS THE SHAPE OF INCOME DEMAND CURVE IN CASE OF LUXURIOUS GOODS AND NECESSARY GOODS? 17. IF TWO GOODS ARE PERFECTLY SUBSTITUTE THEN WHAT IS THE SHAPE OF CROSS DEMAND CURVE? 18. IF TWO GOODS ARE SUBSTITUTE THEN WHAT IS THE SHAPE OF CROSS DEMAND CURVE? 19. WHAT IS THE SHAPE OF CROSS DEMAND CURVE IN CASE OF COMPLEMENTARY GOODS? 20. WHAT IS LAW OF DIMINISHING MARGINAL UTILITY? 21. DIFFERENTIATE BETWEEN DEMAND ELASTICITY AND SUPPLY ELASTICITY? 22. IF SUPPLY ELASTICITY COEFFICIENT IS ONE, INFINITE AND ZERO THEN WHAT IS THE SHAPE OF SUPPLY CURVE? 23. WHAT IS PRODUCTION FROM ECONOMIC POINT OF VIEW? 24. WHAT IS PRODUCTION FUNCTION? 25. DIFFERENTIATE BETWEEN SRPF AND LRPF? 26. WHAT IS MARGINAL PRODUCT (MP)? 27. DIFFERENTIATE BETWEEN OUTPUT ELASTICITY AND SCALE ELASTICITY?
1

28. WHAT IS ISOQUANT? 29. WHAT ARE THE DIFFERENT PROPERTIES OF ISOQUANT? 30. WHY TWO DIFFERENT ISOQUANTS NEVER INTERSECT EACH OTHER, EXPLAIN? 31. WHICH STAGE OF LAW OF VARIABLE PROPORTION IS KNOWN AS RATIONAL PRODUCERS OPERATION STAGE AND WHY? 32. IN WHICH CASE ONE MARKET IS KNOWN AS PERFECT COMPETITION MARKET? 33. WHAT ARE THE DIFFERENT ECONOMIC FORCES, DETERMINES PRICE AND OUTPUT IN PERFECT COMPETITION MARKET? 34. WHAT ARE THE DIFFERENT PROPERTIES OF PERFECT COMPETITION MARKET? 35. GIVEN THE PRODUCTION FUNCTION Q = L2 0.25L3, WHAT WOOD BE THE MARGINAL PRODUCT OF LABOUR WHEN L = 10. 36. THE DEMAND EQUATION OF MR. ADVANI IS : Q = 50 10P + 0.4Y, WHERE Q, P AND Y ARE QUANTITY, PRICE AND INCOME RESPECTIVELY. ASSUME THAT P = 4 AND Y = 100. a. INTERPRET THE EQUATION b. FIND THE PRICE ELASTICITY AN INCOME ELASTICITY AT THE GIVEN PRICE AND INCOME LEVELS. 37. SUPPOSE TOTAL DEMAND FUNCTION IS GIVEN, Q = 40 2P &

TOTAL SUPPLY FUNCTION IS GIVEN, Q = 20 + 2P FIND OUT EQUILIBRIUM PRICE AND QUANTITY UNDER PERFECT COMPETITION MARKET.
38.INITIAL DEMAND FOR ONE COMMODITY IS 100 UNITS, WHEN PRICE IS RS. 20/-. WHEN PRICE INCREASES TO RS. 25/-, DEMAND DECREASES 90 UNITS. CALCULATE THE PRICE ELASTICITY OF DEMAND. 39.INITIAL DEMAND FOR ONE COMMODITY IS 200 UNITS, WHEN PRICE IS RS. 50/-. WHEN PRICE INCREASES TO RS. 60/-, FIND OUT THE NEW DEMAND IF PRICE ELASTICITY COEFFICIENT IS 1, 1.5, 0 AND 0.5. 40.DEMAND EQUATION IS GIVEN, Q = 40 4P SUPPLY EQUATION IS GIVEN, Q = 10 + 2P.FIND OUT THE EQUILIBRIUM PRICE & QUANTITY, ASSUMING MARKET IS ONE PERFECT COMPETITION MARKET. 41.The demand equation is given Q = 40 5P. Find out the price elasticity of demand when Q = 10, by using Revenue method.

LONG TYPE QUESTION (MODULE-I):1. WHAT IS LAW OF DEMAND? WHY THE DEMAND CURVES SLOPES DOWNWARD FROM LEFT TO RIGHT? WHAT THE EXCEPTIONS OF LAW OF DEMAND? 2. WHAT IS LAW OF DEMAND? WHAT ARE THE FACTORS AFFECTING DEMAND? 3. WHAT IS DEMAND ELASTICITY? STATE DIFFERENT METHODS FOR MEASURING PRICE ELASTICITY OF DEMAND. 4. WHAT IS LAW OF SUPPLY? WHY THE SUPPLY CURVE SLOPES UPWARD FROM LEFT TO RIGHT? WHAT ARE THE EXCEPTIONS OF LAW OF SUPPLY? 5. WHAT IS LAW OF SUPPLY? WHAT ARE THE FACTORS AFFECTING SUPPLY? 6. STATE AND EXPLAIN LAW OF VARIABLE PROPORTION. 7. STATE AND EXPLAIN LAW OF RETURNS TO SCALE. 8. WHAT IS PERFECT COMPETITION MARKET? WRITE DOWN THE DIFFERENT CHARECTERISTICS OF PERFECT COMPETITION MARKET STRUCTURE. HOW EQUILIBRIUM PRICE AND OUTPUT DETERMINED UNDER PERFECT COMPETITION MARKET STRUCTURE? DISCUSS WITH NUMERICAL EXAMPLE.

MODULE II OBJECTIVE TYPE QUESTION (MODULE II):1. WHY THE VALUE OF A UNIT OF MONEY IS DIFFERENT IN DIFFERENT TIME PERIODS? 2. WHAT IS THE RELATIONSHIP BETWEEN EFFECTIVE RATE OF INTEREST AND THE FREQUENCY OF COMPOUNDING? 3. DEFINE COMPOUND INTEREST. 4. WHAT DO YOU MEAN BY VALUE OF MONEY? 5. WHAT IS CASH FLOW DIAGRAM? 6. WHAT DO YOU MEAN BY SEMI ANNUAL COMPOUNDING? 7. WHAT IS FLAT RATE OF INTEREST? 8. WHY IS IT ESSENTIAL TO FIND OUT THE TIME VALUE OF MONEY? 9. STATE THE PURPOSE OF CALCULATING PRESENT WORTH EQUIVALENCE. 10. WHAT DO YOU MEAN BY INDEPENDENT ALTERNATIVES?

11. WHY THE VALUE OF A UNIT OF MONEY IS DIFFERENT IN DIFFERENT TIME PERIODS? 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. WHAT DO YOU MEAN BY NET PRESENT WORTH? WHAT IS SALVAGE VALUE? WHAT DO YOU MEAN BY ANNUITY DUE? WHAT IS ANNUAL EQUIVALENT? WHAT IS FUTURE WORTH? WHAT IS SIGNIFICANCE OF CAPITAL RECOVERY FACTOR? WHAT IS MEANT BY ECONOMIC EQUIVALENCE? WHAT IS SECONDARY COST OF A PROJECT? WHAT DO YOU MEAN BY ECONOMIC SERVICE LIFE? DEFINES THE TERM IRR. STATES THE BENEFIT-COST RATIO TO EVALUATE A SINGLE PUBLIC ACTIVITY.
4

23. HOW DOES CHANGE IN INTEREST RATE AFFECT EQUIVALENCE BETWEEN TWO CASH FLOWS? 24. HOW IS PRESENT WORTH HELPFUL IN EVALUATING THE PROJECT?

25. STATE TWO DIFFERENCES BETWEEN TANGIBLE BENEFITS AND INTANGIBLE BENEFITS. 26. 27. Give the acceptance rule of IRR. HOW IS IRR DIFFERENT FROM NPV?

28. DISTINGUISH BETWEEN A PRIVATE PROJECT AND PUBLIC PROJECT. 29. DIFFERENTIATE BETWEEN REVENUE DOMINATED CASH FLOW AND COST DOMINATED CASH FLOW. 30. WHAT IS ASSET? DIFFERENCIATE BETWEEN TANGIBLE AND INTANGIBLE ASSET? 31. WHAT ARE THE INFORMATIONS REQUIRED FOR CALCULATING THE AMOUNT OF DEPRECIATION? 32. 33. 34. 35. 36. WHAT IS SALVAGE VALUE? WHAT IS DEPLETION? DISCUSS BENEFITS AND LIMITATIONS OF WRITTEN DOWN VALUE METHOD. WHAT IS AMORTIZATION? WHAT IS STRAIGHT LINE METHOD OF CHARGING DEPRECIATION? YOU MEAN BY DECLINING BALANCE METHOD OF

37. WHAT DO DEPRECIATION?

38. What is nominal interest rate? 39. Differentiate between annuity, deferred annuity & annuity due. 40. Write down the basic assumptions (conditions) for present worth comparison.
41.WHY IS DEPRECIATION CHARGED ON FIXED ASSETS? 42.r = 30% COMPOUNDED MONTHLY, CALCULATE i(eff). 43.DIFFERENTIATE BETWEEN ARITHMETIC SERIES PAYMENT AND GEOMETYRIC SERIES PAYMENT. 44.WHAT IS RULE-72? 45.DIFFERENTIATE BETWEEN ORDINARY ANNUITY, DEFERRED ANNUITY & ANNUITY DUE. 5

LONG TYPE QUESTION (MODULE II):1. WHAT DO YOU MEAN BY DEPRECIATION? WHAT ARE THEVARIOUS METHODS FOR CHARGING DEPRECIATION? 2. STATE THE OBJECTIVES OF CHARGING DEPRECIATION. MAKE A COMPARATIVE STUDY BETWEEN STRAIGHT-LINE METHOD AND WRITTEN-DOWN VALUE METHOD. 3. What are the reasons of depreciation of fixed assets? Also explain the needs for charging depreciation. 4. HOW IS STRAIGHT-LINE METHOD DIFFERENT FROM DECLINING METHOD OF DEPRECIATION? 5. Critically evaluate internal rate of return as an investment criterion. Compare this method with other methods. 6. What do you mean by benefit-cost criteria? How will you compare benefits with cost? Explain the incremental benefit-cost evaluation. 7. STATES THE CONDITIONS FOR PRESENT WORTH COMPARISIONS. DISCUSS THE COMPARISION OF ASSETS THAT HAVE UNEQUAL LIFE. GIVE EXAMPLE. 8. HOW IS PRESENT WORTH COMPARISION DIFFERENT FROM FUTURE WORTH COMPARISION? DISCUSS WITH EXAMPLES, THEIR APPLICATION IN DECISION MAKING. 9. EXPLAIN THE IMPORTANCE OF EQUIVALENT ANNUAL WORTH COMPARISION. HOW CAN YOU COMPARE THE ASSETS WITH UNEQUAL LIFE? EXPLAIN WITH THE HELP OF ONE EXAMPLE. 10. WHY IS IT REQUIRED TO FINDOUT EQUIVALENT ANNUAL WORTH? HOW CAN YOU COIMPARE THE ASSETS WITH UNEQUAL LIVES? DISCUSS WITH EXAMPLES. 11. A COMPANY HAS PURCHASED EQUIPMENT WHOSE FIRST COST IS RS. 1,00,000 WITH AN ESTIMATED LIFE OF 10 YEARS. THE ESTIMATED SALVAGE VALUE OF THE EQUIPMENT AT THE END OF ITS LIFE TIME IS RS. 20,000/-. COMPUTE THE AMOUNT OF DEPRECIATIONS AND THE BOOK VALUE FOR EACH AND EVERY YEAR OF SERVICE BY USING SLDM AND WDVM OF DEPRECIATION. 12. P = Rs. 12,000/-, r = 24% C.Q., N = 3YR. CALCULATE FUTURE VALUE AND TOTAL AMOUNT OF INTEREST EARNED AFTER THE COMPLETION OF 3YR.
6

13. HOW NOMINAL INTEREST RATE IS ECONOMICALLY EQUIVALENT EFFECTIVE INTEREST RATE, EXPLAIN WITH SUITABLE EXAMPLE? 14. A FIRM HAS TWO ALTERNATIVE PROPOSALS FOR INVESTING IN EITHER MACHINE-X OR MACHINE-Y. THE FOLLOWING DATA ARE AVAILABLE.

TO

COMPONENTS INITIAL PURCHASE PRICE ESTIMATED SERVICE LIFE SALVAGE VALUE AT THE END ANNUAL MAINTENANCE COST

MACHINE-X 4,00,000 4YR 2,00,000 40,000

MACHINE-Y 8,00,000 4YR 5,50,000 NIL

BY USING FUTURE WORTH METHOD, DETERMINE THE MACHINE WHICH IS MORE SUITABLE FOR THE FIRM. THE PREVAILING INTEREST RATE IS 12% P.A. 15. THE LEASE PAYMENTS OF A MACHINE AMOUNT TO Rs. 10,000 PER MONTH FOR FIVE YEARS. IF PAYMENTS ARE MADE ON THE FIRST OF EACH MONTH, WHAT IS THE PRESENT WORTH OF THE AGREEMENT AT A NOMINAL ANNUAL INTEREST RATE OF 12%, COMPOUNDED MONTHLY. 16. Mr. Pattnaik has 10 more years of service. He is planning for his retired life. He would like to deposit Rs. 8500/- at the end of 1 st year and thereafter he wants to deposit the amount with an annual decrease of RS/- 500 for the next 9years, with an interest rate of 15%.find the total amount at the end of the 10 th year of the above series. 17. A COMPANY IS PLANNING TO BUY A MACHINE FOR EXPANDING ITS EXISTING BUSINESS ACTIVITY. IT HAS IDENTIFIED TWO DIFFERENT COMPANIES FOR SUPPLY OF THE MACHINE. THE DETAILS OF THE MACHINES ARE GIVEN BELOW: COMPONENTS Initial cost Annual incremental revenue Life(in years) Salvage value Machine of X co. 5,00,000 80,000 8 40,000 Machine of Y co. 9,00,000 2,50,000 8 60,000

SUGGEST WHICH MACHINE THE COMPANY WILL ACCEPT WITH A GIVEN INTEREST RATE 10% ANNUALLY. 18. KALINGA LTD. HAS BORROWED Rs. 30,00,000/- FROM HOME FINANCE LTD. TO FINANCE THE PURCHASE OF A HOUSE FOR 15 YEARS . THE RATE OF INTEREST ON SUCH LOAN IS 24% PER ANNUM. COMPUTE THE AMMOUNT OF ANNUAL INSTALMENT. 19. IF UTKAL LTD. EXPECT CASH INFLOWS FROM ITS INVESTMENT PROPOSAL IT HAS UNDERTAKEN IN TIME PERIOD ZERO, Rs 2,00,000 AND Rs 1,50,000 FOR THE FIRST TWO YEARS RESPECTIVILY AND THEN EXPECTS ANNUITY PAYMENT OR Rs 1,00,000 FOR THE NEXTY EIGHT YEARS, WHAT WOULD BE THE PRESENT ALUE OF CASH INFLOWS, ASSUMING A 10% INTEREST RATE.

MODULE III OBJECTIVE TYPE QUESTION (MODULE III):1. WHAT IS MARGIN OF SAFETY? 2. DISCUSS VARIOUS TERMS ASSOCIATED WITH BEA AND APPLICATIONS FOR DECISION MAKING. 3. 4. 5. 6. WHAT IS CONTRIBUTION? WHAT IS BEP? EXPLAIN THE ELEMENTS OF COST. Differentiate between cost, costing.

7. Differentiate between fixed cost and variable cost. 8. What is overhead cost? 9. WHAT IS SEMI-VARIABLE COST? 10. WHAT IS MIXED COST? 11. DISCUSS THE ADVANTAGES OF COST SHEET. 12. WHAT IS BANK? 13. WHAT IS COMMERCIAL BANK? 14. DIFFERENTIATE BETWEEN SAVINGS DEPOSIT ACCOUNT AND CURRENT DEPOSIT ACCOUNT? 15. DIFFERENTIATE BETWEEN FIXED DEPOSIT AND RECURRING DEPOSIT ACCOUNT? 16. WHAT IS CALL MONEY? 17. WHAT IS CASH CREDIT? 18. WHAT IS TERM LOAN? 19. WHAT IS OVER DRAFT? 20. DIFFERENTIATE BETWEEN BILLS OF EXCHANGE AND DISCOUNTED BILLS OF EXCHANGE?
8

21. DIFFERENTIATE BETWEEN BILLS OF EXCHANGE AND FOREIGN BILLS OF EXCHANGE? 22. WHAT IS CRR? 23. DIFFERENTIATE BETWEEN PRIMARY DEPOSIT AND DERIVATIVE DEPOSIT? 24. WHAT DO YOU MEAN BY CREDIT CREATION BY COMMERCIAL BANK? 25. WHAT IS CENTRAL BANK? 26. WHICH BANK IS THE CENTRAL BANK OF INDIA? 27. WHY RBI IS KNOWN AS BANKER, AGENT AND ADVISOR TO GOVT? 17. WHY RBI IS KNOWN AS BANKERS BANK? 28. WHY RBI IS KNOWN AS LENDER OF THE LAST RESORT? 29. WHAT IS PRICE? 30. WHAT IS BANKING SYSTEM? 31. DIFFERENTIATE BETWEEN FINANCIAL MARKET, FINANCIAL INTERMEDIARIES AND FINANCIAL PRODUCT? 32. DIFFERENTIATE BETWEEN MONEY MARKET AND CAPITAL MARKET? 33. WHAT IS FOREX MARKET? 34. WHATS THE ROLE OF FINANCIAL INTERMEDIARIES IN INDIAN FINANCIAL SYSTEM? 35. WHAT IS SHARE? 36. DIFFERENTIATE BETWEEN CUMULATIVE AND NON-CUMULATIVE PREFERENCE SHARE? 37. DIFFERENTIATE BETWEEN PREFERENCE SHARE, ORDINARY SHARE AND DEFERRED SHARE? 38. DIFFERENTIATE BETWEEN SHARE AND DEBENTURE? 39. WHAT IS DEBENTURE? 40. WHAT IS TREASURY BILL? 41. DIFFERENTIATE BETWEEN CALL MONEY AND NOTICE MONEY? 42. WHAT IS OVERNIGHT MONEY? 43. WHAT IS CERTIFICATE OF DEPOSITS? 44. WHAT IS COMMERCIAL PAPER? 45. DIFFEREMTIATE BETWEEN COMMERCIAL BANK AND CENTRAL BANK? 46. What is prime cost? 47. Differentiate between works overhead and works cost. 48. How can you calculate DIRECT MATERIAL COST, when O/S of material, C/S of material and purchase of material is given? 49. Differentiate between carriage inward and carriage outward. 50. What is cost sheet?

LONG TYPE QUESTION (MODULE III):1. AB LTD., A MULTI-PRODUCT COMPANY, FURNISHES YOU THE FOLLOWING DATA RELATING TO THE CURRENT YEAR; COMPONENTS SALES TOTAL COST FIRST HALF YEAR(Rs) 45,000 40,000 OF THE SECOND HALF YEAR(Rs) 50,000 43,000 OF THE

ASSUMING THAT THERE IS NO CHANGE IN PRICES AND VARIABLE COSTS, AND THAT THE FIXED EXPENSES ARE INCURRED EQUALLY IN THE TWO HALF-YEAR PERIOD, CALCULATE FOR THE YEAR: A) PROFIT-VOLUME RATIO. B) FIXED EXPENSES. C) BREAK-EVEN SALES. D) MARGIN OF SAFETY AS A PERCENTAGE OF SALES 2. THE FOLLOWING FIGURES RELATE TO A MANUFACTURING CMPANY. COMPONENTS SALES PROFIT 2005(Rs) 50,000 10,000 2006(Rs) 80,000 25,000

FIND OUT I) P/V RATIO II) FIXED COST III) BEP IV) MARGIN OF SAFETY.
10

3. THE FOLLOWING FIGURES ARE AVAILABLE IN RESPECT OF A CONCERN. FIXED COST =Rs 1,20,000 VARIABLE COST/UNIT=Rs 3.00 SELLING PRICE/UNIT=Rs7.00 DETERMINE-A) P/V RATIO B) BEP C) PROFIT WHEN THE OUTPUT IS 50,000 UNITS D)PROFIT WITH 10% INCREASE IN SELLING PRICE. 4. WHAT IS COMMERCIAL BANK? STATE DIFFERENT FUNCTIONS OF COMMERCIAL BANK. 5. WHAT IS CENTRAL BANK? STATE DIFFERENT FUNCTIONS OF RESERVE BANK OF INDIA. 6. WHAT IS FINANCIAL SYSTEM? BRIEFLY STATE ABOUT INDIAN FINANCIAL SYSTEM. 7. ABC - MANUFACTURING INDUSTRY PROVIDES YOU FOLLOWING INFORMATION FOR PRODUCING 100 UNITS OF COMMODITY X, DURING YEAR ENDED JULY-2010. DMC = RS. 50,000/- , DLC = RS. 30,000/-, WORKS OVERHEAD = RS. 25,000/-, ADMINISTRATIVE OVERHEAD = RS. 20,000/-, S/D OVERHEAD = RS. 15,000/-, R/D OVERHEAD = RS. 10,000/-. PREPARE A COST SHEET SHOWING PRIME COST, WORKS COST, COST OF PRODUCTION, TOTAL COST, TOTAL PROFIT & SALES IF PROFIT IS 10% OF TOTAL COST.

8. MN - MULTI PRODUCT MANUFACTURING COMPANY PROVIDES YOU THE FOLLOWING COST INFORMATION FOR PRODUCING 1000 UNITS OF A PERTICULAR PRODUCT DURING YEAR ENDED JUNE 2010. PREPARE A COST SHEET AND ALSO CALCULATE TOTAL PROFIT & TOTAL SALES IF TOTAL PROFIT IS 10% OF TOTAL SALES. DMC = RS. 50,000/-, DLC = RS. 30,000/-, IMC = RS. 20,000/-, ILC = RS. 5000/-, ADM OVERHEAD = RS. 20,000/-, S/D OVERHEAD = RS. 15/- PER UNIT SOLD, R/D OVERHEAD = RS. 10,000/-. NO OF UNITS SOLD = 1000 UNITS.

9. XYZ - MANUFACTURING INDUSTRY PROVIDES YOU THE FOLLOWING COST INFORMATION DURING 1ST JAN 2009 AND 31ST DECEMBER 2009. PREPARE A COST SHEET AND ALSO CALCULATE TOTAL PROFIT AND SALES IF PROFIT IS 25% OF TOTAL COST.

11

 OPENING STOCK OF RAW MATERIALS ON 1ST JAN 2009 = RS. 50,000/ PURCHASE OF RAW MATERIALS = RS. 70,000/ CLOSING STOCK OF RAW MATERIALS ON 31ST DEC 2009 = RS. 20,000/ DIRECT WAGES = RS. 30,000/ PRODUCTION OVERHEAD = 10% OF PRIME COST ADMINISTRATIVE OVERHEAD = 20% OF WORKS COST S/D OVERHEAD = RS. 10/- PER UNIT SOLD NO OF UNITS PRODUCED = 1000 UNITS NO OF UNITS SOLD = 1000 UNITS

10. XYZ MANUFACTURING INDUSTRY PROVIDES YOU THE FOLLOWING COST INFORMATION DURING 1ST JAN 2009 AND 31ST DECEMBER 2009. PREPARE A COST SHEET.

OPENING STOCK OF RAW MATERIALS ON 1ST JAN 2009 = RS. 50,000/ PURCHASE OF RAW MATERIALS = RS. 70,000/ CLOSING STOCK OF RAW MATERIALS ON 31ST DEC 2009 = RS. 20,000/ DIRECT WAGES = RS. 30,000/ PRODUCTION OVERHEAD = 10% OF PRIME COST ADMINISTRATIVE OVERHEAD = 20% OF WORKS COST S/D OVERHEAD = RS. 10/- PER UNIT SOLD NO OF UNITS PRODUCED = 1000 UNITS NO OF UNITS SOLD = 500 UNITS

12