Documente Academic
Documente Profesional
Documente Cultură
Engineering Economics
by H. Agarwal1
Created by
Mohd Arif
B.Tech
Computer Engineering
Uttarakhand Technical University
College Teacher
Arshad Khan
Cross-Checked by
Lavitha Pereira
August 13, 2013
1 Funded
Book Description
Title: Engineering Economics
Author: H. Agarwal
Publisher: Anand Publications
Edition: 1
Year: 2010
ISBN: 978-93-80225-47-0
Scilab numbering policy used in this document and the relation to the
above book.
Exa Example (Solved example)
Eqn Equation (Particular equation of the above book)
AP Appendix to Example(Scilab Code that is an Appednix to a particular
Example of the above book)
For example, Exa 3.51 means solved example 3.51 of this book. Sec 2.3 means
a scilab code whose theory is explained in Section 2.3 of the book.
Contents
List of Scilab Codes
19
4 Capital Budgeting
27
59
64
9 standard costing
91
1.1
1.2
1.3.a
1.3.b
1.4
1.5
1.6.1
Exa 1.6.2
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
1.6.3
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
2.1
2.2
2.3
2.4
2.5.a
2.5.b
7
7
8
9
9
10
10
11
11
12
12
13
13
14
15
15
16
16
17
17
19
19
20
21
21
22
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
2.5.c
2.6
2.7
2.8
2.9
2.10
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13.1
4.13.2
4.13.3
4.13.4
4.13.5
4.14.1
4.14.2
4.14.3
4.14.4
4.14.5
5.2
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
5.3
8.1
8.2
8.3
8.4
8.5
8.6
8.7
23
23
24
24
25
25
27
27
28
29
32
32
33
34
37
38
39
40
42
44
45
46
47
49
50
52
54
55
59
62
64
65
66
69
71
73
75
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
8.8
8.9
8.10
8.11
8.12
8.13
9.1
9.2
9.3
9.4
9.5
9.6
9.7.a
9.7.b
9.7.c
9.7.d
9.7.e
9.8
9.9
9.10
9.11
9.12
9.13
9.14
9.15
9.16
9.17
9.18
9.19
9.21
9.22
Chapter 1
Time Value of Money
// Exa1
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =500; // i n Rs
r =5; // i n % p e r annum
i = r /100;
n =3; // i n y e a r s
// f o r m u l a Vn=Vo(1+ i ) n
V3 = Vo *(1+ i ) ^ n ;
disp ( V3 , f u t u r e v a l u e a f t e r t h r e e y e a r s : )
CI = V3 - Vo ;
disp ( CI , compound i n t e r e s t i s
: )
// Exa2
7
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 i =6; // i n % p e r annum
7 // we know r u l e o f 72
8 disp ( A c c o r d i n g t o Rule o f 72 :
d o u b l i n g p e r i o d =72/(
r a t e o f i n t e r e s t ) );
9 doublingperiod =72/ i ;
10 disp ( doublingperiod , D o u b l i n g p e r i o d ( i n y e a r s ) : ) ;
11
12
13
14
// we know r u l e o f 69
disp ( A c c o r d i n g t o Rule o f 69 : d o u b l i n g p e r i o d
=0.35+69/( r a t e o f i n t e r e s t ) ) ;
15 doublingperiod =0.35+69/ i ;
16 disp ( doublingperiod , D o u b l i n g p e r i o d ( i n y e a r s ) : ) ;
// Exa3a
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =1000; // i n Rs
r =12; // i n % p e r annum
i = r /100;
t =3; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n y e a r l y b a s i s
n=t;
// f o r m u l a Vn=Vo(1+ i ) n
Vn = Vo *(1+ i ) ^ n ;
disp ( Vn , The compound v a l u e ( i n Rs . ) : )
// The a n s i n t h e book i s wrong
8
16
// Exa3b
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =1000; // i n Rs
r =12; // i n % p e r annum
i = r /100;
t =3; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n q u a r t e r l y b a s i s
n =4* t ;
i = i /4;
// f o r m u l a Vn=Vo(1+ i ) n
Vn = Vo *(1+ i ) ^ n ;
disp ( Vn , The compound v a l u e ( i n Rs . ) : )
// Exa4
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =500; // i n Rs
r =16; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n q u a r t e r l y b a s i s
m =4;
9
// Exa5
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =5000; // i n Rs
r =12; // i n % p e r annum
i = r /100;
//On 6 t h y e a r means amount d e p o s i t e d f o r 5 y e a r s
n =5; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n H a l f y e a r l y b a s i s
m =2;
// f o r m u l a Vn=Vo(1+ i /m) (mn )
Vn = Vo *(1+ i / m ) ^( m * n )
disp ( Vn , A f t e r c o m p l e t i n g 5 y e a r s i . e , on i t s 6 t h
year c h i l d
w i l l r e c i e v e ( i n Rs . ) : )
10
7 i = r /100;
8 // componding i s done h a l f y e a r l y
9 m =2;
10 // f o r m u l a EIR=(1+ i /m) m1;
11 EIR =(1+ i / m ) ^m -1;
12 %EIR =100* EIR ;
13 disp ( %EIR , H a l f y e a r l y EIR ( i n %) : ) ;
// Exa 6 ( i i )
clc ;
clear ;
close ;
// g i v e n d a t a :
r =9; // i n % p e r annum
i = r /100;
// componding i s done q u a r t e r l y
m =4;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
%EIR =100* EIR ;
disp ( %EIR , Q u a r t e r l y EIR ( i n %) : ) ;
11
6
7
8
9
10
11
12
13
r =9; // i n % p e r annum
i = r /100;
// componding i s done monthly
m =12;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
%EIR =100* EIR ;
disp ( %EIR , Monthly EIR ( i n %) : ) ;
// Exa7
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =100; // i n Rs
Vn =200; // i n Rs
n =7; // i n y e a r s
m =2; // f o r h a l f y e a r l y compounding
// f o r m u l a Vn=Vo(1+ i /m) (mn )
// s o l v i n g f o r i g i v e s
i = m *( %e ^(( log ( Vn / Vo ) ) /( m * n ) ) -1) ;
r = i *100;
disp (r , The r a t e o f i n t e r e s t ( i n % p e r annum ) i s
)
12
// g i v e n d a t a :
R1 =5000; // i n Rs
R2 =10000; // i n Rs
R3 =15000; // i n Rs
R4 =10000; // i n Rs
R5 =8000; // i n Rs
r =10; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
// f o r m u l a Vn=R1(1+ i ) ( n 1)+R2(1+ i ) ( n 2)
+ . . . . . . . . . . . . . + Rn1(1+ i )+Rn
15 V5 = R1 *(1+ i ) ^( n -1) + R2 *(1+ i ) ^( n -2) + R3 *(1+ i ) ^( n -3) + R4
*(1+ i ) ^( n -4) + R5 ;
16 disp ( V5 , The f u t u r e v a l u e o f t h i s s e r i e s o f payments
( i n Rs ) w i l l be : )
5
6
7
8
9
10
11
12
13
14
// Exa9
clc ;
clear ;
close ;
// g i v e n d a t a :
A =1000; // i n Rs
r =16; // i n % p e r annum
i = r /100;
n =12; // i n y e a r s
// f o r m u l a FVA=(A(1+ i ) n 1) / i ;
FVA =( A *((1+ i ) ^n -1) ) / i ;
disp ( FVA , The f u t u r e v a l u e ( i n Rs . ) i s : )
// Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
// Exa10
clc ;
clear ;
close ;
// g i v e n d a t a :
r =6; // i n % p e r annum
i = r /100;
// componding i s done h a l f y e a r l y
m =2;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
// c a l c u l a t i n g FVA t a k i n g i =EIR ;
// f o r m u l a FVA=(A(1+ i ) n 1) / i ;
A =100; // i n Rs
n =18; // i n y e a r s
i = EIR ;
FVA =( A *((1+ i ) ^n -1) ) / i ;
disp ( FVA , F u t u r e V a l u e o f amount ( i n Rs ) : ) ;
// Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
// Exa11
clc ;
clear ;
close ;
// g i v e n d a t a :
Vn =5000; // i n Rs
r =10; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
// f o r m u l a f o r p r e s e n t v a l u e Vo=Vn/(1+ i ) n
Vo = Vn /(1+ i ) ^ n ;
disp ( Vo , P r e s e n t v a l u e i s : )
14
Scilab code Exa 1.12 Calculate how much amount should be deposited
today
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
// Exa12
clc ;
clear ;
close ;
// g i v e n d a t a :
Vn =15000; // i n Rs
r =12; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
m =2; // f o r h a l f y e a r l y compounding
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
// f o r m u l a f o r p r e s e n t v a l u e Vo=Vn/(1+ i ) n
// t a k i n g i =EIR ;
i = EIR ;
Vo = Vn /(1+ i ) ^ n ;
disp ( Vo , P r e s e n t v a l u e i s : )
// Exa13
clc ;
clear ;
close ;
// g i v e n d a t a :
R1 =676; // i n Rs
R2 =676; // i n Rs
r =4; // i n % p e r annum
i = r /100;
15
10 n =2; // i n y e a r s
11 // f o r m u l a f o r p r e s e n t v a l u e o f
s e r i e s payments V0=R1
/(1+ i ) ( 1 )+R2/(1+ i ) ( 2 ) + . .
12 Vo = R1 /(1+ i ) ^(1) + R2 /(1+ i ) ^(2) ;
13 disp ( Vo , The b o r r o w e d sum i s : )
Scilab code Exa 1.14 Calculate present value of a series of unequal cashflows
// Exa14
clc ;
clear ;
close ;
// g i v e n d a t a :
R1 =5000; // i n Rs
R2 =10000; // i n Rs
R3 =10000; // i n Rs
R4 =3000; // i n Rs
R5 =2000; // i n Rs
r =10; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
// f o r m u l a f o r p r e s e n t v l u e o f s e r i e s payments PV=R1
/(1+ i ) ( 1 )+R2/(1+ i ) ( 2 ) + . . . . . . . . . . . . . + Rn/(1+ i ) n ;
15 PV = R1 /(1+ i ) ^(1) + R2 /(1+ i ) ^(2) + R3 /(1+ i ) ^(3) + R4 /(1+ i )
^4+ R5 /(1+ i ) ^5;
16 disp ( PV , P r e s e n t v a l u e i s : )
1
2
3
4
5
6
7
8
9
10
11
12
13
14
16
4
5
6
7
8
9
10
close ;
// g i v e n d a t a :
Vo =20000; // i n Rs
r =4; // i n % p e r annum
i = r /100;
n =10; // i n y e a r s
// f o r m u l a f o r a n n u i t y can be d e t e r m i n e d by Vo=(A
((1+ i ) n1) ) / ( i ((1+ i ) n ) ) ;
11 A =( Vo *( i *((1+ i ) ^ n ) ) ) /((1+ i ) ^n -1)
12 disp (A , The amount o f e a c h i n v e s t m e n t ( i n Rs ) i s : )
13 // Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
17
3
4
5
6
7
8
9
10
clear ;
close ;
// g i v e n d a t a :
Vo =200000; // i n Rs
r =8; // i n % p e r annum
i = r /100;
n =5; // i n y e a r s
// Formula f o r s i z e o f i n s t a l l m e n t can be c a l c u l a t e d
by Vo=(A((1+ i ) n1) ) / ( i (1+ i ) n ) ;
11 A =( Vo *( i *(1+ i ) ^ n ) ) /((1+ i ) ^n -1) ;
12 disp (A , R e q u i r e d v a l u e ( i n Rs ) : )
13 // Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
18
Chapter 2
Simple and compound interest
// Exa1
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =10000; // i n r u p e e s
n =3; // i n y e a r s
r =10; //% p e r annum
A = P *(1+ r /100) ^ n ;
CI =A - P ; // i n r u p e e s
disp ( Compound i n t e r e s t
)
i s : + string ( CI ) + Rupees .
19
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
close ;
// For f i r s t y e a r
P1 =500; // i n r u p e e s
n =3; // i n y e a r s
r =10; //% p e r annum
T =1 // i n y e a r
I1st =( P1 * r * T ) /100;
A1 = P1 + I1st ;
// For s e c o n d y e a r
P2 = A1 ;
I2nd =( P2 * r * T ) /100;
A2 = P2 + I2nd ;
// For t h i r d y e a r
P3 = A2 ;
I3rd =( P3 * r * T ) /100;
A3 = P3 + I3rd ;
// compound i n t e r e s t o r 3 y e a r s
CI = A3 - P1 ;
disp ( Compound i n t e r e s t i s : + string ( CI ) + Rupees .
)
Scilab code Exa 2.3 Find the ammount and compounded interest
1
2
3
4
5
6
7
8
9
10
11
12
// Exa2
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =5000; // i n r u p e e s
n =3/2; // i n y e a r s
r =10/2; //% p e r annum p a i d h a l f y e a r l y
m =2; // f r e q o f compounding
A = P *(1+ r /100) ^( m * n ) ;
CI =A - P ; // i n r u p e e s
disp ( Compound i n t e r e s t i s : + string ( CI ) + Rupees .
20
16 x , t h e n by f o r m u l a )
18 // 16=(1+ r / 1 0 0 ) n ;
19 n = log (16) / log (1+ r /100) ;
20 disp ( Time i s : + string ( n ) + y e a r s ) ;
is :
21
6
7
8
9
10
11
12
13
14
15
P =4000; // i n r u p e e s
N =9; // months
R =6; // i n % p e r annum
// i f i n t e r e s t i s r e c k o n e d q u a r t e r l y
r = R /4; // i n % p e r q u a r t e r , a s t h e r e a r e 4 q u a r t e r s i n
a year
n =( N /12) *4; // i n q u a r t e r s
Amount1 = P *(1+ r /100) ^ n ;
CI1 = Amount1 - P ;
disp ( CI1 , Compound i n t e r e s t w h i l e r e c k o n e d q u a r t e r l y
: )
// Ans i n t h e book i s n o t c o r r e c t
Scilab code Exa 2.5.b Find compound interest reckoned half yearly
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
// Exa5 ( b )
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =4000; // i n r u p e e s
N =9; // months
R =6; // i n % p e r annum
// i f i n t e r e s t i s r e c k o n e d h a l f y e a r l y
r = R /2; // i n % p e r h a l f y e a r l y , a s t h e r e a r e 2 h a l f
years in a year
n =( N /12) *2; // i n h a l f y e a r s
Amount2 = P *(1+ r /100) ^ n ;
CI2 = Amount2 - P ;
disp ( CI2 , Compound i n t e r e s t w h i l e r e c k o n e d h a l f
y e a r l y : )
// Ans i n t h e book i s n o t c o r r e c t
22
// Exa6
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =10000; // i n r u p e e s
N =3; // y e a r s
r1 =4; // i n % p e r annum f o r 1 s t y e a r
r2 =5; // i n % p e r annum f o r 2 nd y e a r
r3 =10; // i n % p e r annum f o r 3 r d y e a r
A = P *(1+ r1 /100) *(1+ r2 /100) *(1+ r3 /100) ;
CI =A - P ;
disp ( Compound i n t e r e s t i s : + string ( CI ) + Rupees .
)
23
// Exa7
clc ;
clear ;
close ;
// g i v e n d a t a i s :
CI =496.50; // compound i n t e r e s t i n r u p e e s
n =3; // i n y e a r s
r =10; // r a t e i n % p e r annum
disp ( CI i s g i v e n by : ) ;
disp ( CI=P(1+ r / 1 0 0 ) nP ) ;
// s o l v i n g t h i s eqn
P = CI /((1+ r /100) ^n -1) ;
disp ( P r i n c i p a l amount i s : + string ( P ) + Rupees . )
// Exa8
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =2000; // i n r u p e e s
A =2662; // i n r u p e e s
r =10; //% p e r annum
// f o r m u l a : A=P(1+ r / 1 0 0 ) n ;
// s o l v i n g f o r n
n = log ( A / P ) / log (1+ r /100) ;
disp ( The t i m e i n which Rs . 2 0 0 0 w i l l
2662 i s
: + string ( n ) + y e a r s . )
24
r i s e t o Rs .
// Exa9
clc ;
clear ;
close ;
// g i v e n d a t a i s :
r =5; //% p e r annum
n =2; // i n y e a r s
// l e t amount=P
// CI=P(1+ r / 1 0 0 ) nP ;
// S I =(P r n ) / 1 0 0 ;
// CIS I =15 Rupees ; g i v e n
disp ( s o l v i n g e q n s f o r CI and SI , we g e t : )
disp ( CI = 0 . 1 0 2 5 P ) ;
disp ( S I =0 .1 0P ) ;
P =15/(0.1025 -0.10) ; // u s i n g CIS I
disp ( P r i n c i p a l amount i s : + string ( P ) + Rupees . )
// Exa9
clc ;
clear ;
close ;
// g i v e n d a t a i s :
CI =102; // i n r u p e e s
r =4; // i n % p e r annum
n =2; // i n y e a r s
// L e t p r i n c i p a l amount i s P
// Amount w i l l be : A=P+102
// f o r m u l a : A=P(1+ r / 1 0 0 ) n=P+102;
25
: + string ( SI ) + Rupees . )
26
Chapter 4
Capital Budgeting
y e a r s ) i s : );
27
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h y e a r s
CIF1 =20000; // i n Rs .
CIF2 =30000; // i n Rs .
CIF3 =40000; // i n Rs .
CIF4 =50000; // i n Rs .
// Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h
years
CumCIF1 =20000; // i n Rs .
CumCIF2 =50000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =140000; // i n Rs .
disp ( I n t h e t a b l e i t can be s e e n t h a t i n 3 y e a r s
9 0 0 0 0 Rs h a s b e e n r e c o v e r e d , Rs . 1 0 0 0 0 i s l e f t
out o f i n i t i a l investment . )
disp ( Payback p e r i o d i s b e t w e e n 3 and 4 y e a r s . )
E =3;
B =100000 -90000; // r e m a i n i n g b a l a n c e t o be r e c o v e r e d
C =50000; // c a s h f l o w o f l a s t y e a r
PaybackPeriod = E + B / C ;
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t ( i n
y e a r s ) i s : );
// Note : a n s i n t h e book i s n o t a c c u r a t e , g i v e n 3
y e a r s and two month . but i t i s 3 . 2 y e a r s and can
s a y 3 y e a r s 2 month p l u s 12 d a y s .
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p r o j e c t A(
p r o j e c t B(
p r o j e c t C(
p r o j e c t D(
// g i v e n d a t a f o r p r o j e c t E :
Investment =58500; // i n Rs
AnnCIF =15500; // i n Rs
PayBackPeriod = Investment / AnnCIF ; // i n y e a r s
disp ( PayBackPeriod , Payback p e r i o d o f t h e p r o j e c t E(
in years ) i s : )
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// P r o j e c t B : c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5
th y e a r s
CIF1 =30000; // i n Rs .
CIF2 =40000; // i n Rs .
CIF3 =20000; // i n Rs .
CIF4 =10000; // i n Rs .
CIF5 =5000; // i n Rs .
// P r o j e c t B : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 =30000; // i n Rs .
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CumCIF2 =70000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =100000; // i n Rs .
CumCIF5 =105000; // i n Rs .
disp ( I n t h e t a b l e i t can be s e e n t h a t i n c o m p l e t e 4
y e a r s 1 0 0 0 0 0 Rs h a s b e e n r e c o v e r e d . )
41 disp (4 , Payback p e r i o d o f t h e p r o j e c t B( i n y e a r s ) i s
: );
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// P r o j e c t C : c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5
th y e a r s
CIF1 =40000; // i n Rs .
CIF2 =20000; // i n Rs .
CIF3 =30000; // i n Rs .
CIF4 =40000; // i n Rs .
CIF5 =10000; // i n Rs .
// P r o j e c t C : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 =40000; // i n Rs .
CumCIF2 =60000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =130000; // i n Rs .
CumCIF5 =140000; // i n Rs .
disp ( I n t h e t a b l e i t can be s e e n t h a t i n 3 y e a r s
9 0 0 0 0 Rs h a s b e e n r e c o v e r e d , Rs . 1 0 0 0 0 i s l e f t
out o f i n i t i a l investment . )
disp ( Payback p e r i o d i s b e t w e e n 3 and 4 y e a r s . )
E =3;
B =100000 -90000; // r e m a i n i n g b a l a n c e t o be r e c o v e r e d
C =40000; // c a s h f l o w o f l a s t payback y e a r
PaybackPeriod = E + B / C ;
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t C(
i n y e a r s ) i s : );
// f i n a l c o n c l u s i o n
disp ( As a l l t h e p r o j e c t s have payback p e r i o d o f
l e s s t h a n 5 y e a r s and 5 y e a r s i s t h e s t a n d a r d
payback p e r i o d , a l l t h e t h r e e p r o j e c t s a r e
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a c c e p t a b l e . )
S a l v a g e V a l u e ) /2+ S a l v a g e V a l u e+W o r k i n g C a p i t a l
AvgInv =( InInv - SalvageValue ) /2+ SalvageValue +
WorkingCapital
12 disp ( AvgInv , A v e r a g e i n v e s t m e n t o f t h e p r o j e c t i s :
)
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// Exa 6
clc ;
clear ;
close ;
// g i v e n d a t a :
CostofMac =80000; // i n Rs .
SalvageValue =10000 // i n Rs .
// P r o f i t s o f 1 s t , 2 nd , 3 rd , 4 t h and t h y e a r s
P1 =20000; // i n Rs .
P2 =40000; // i n Rs .
P3 =30000; // i n Rs .
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12 P4 =15000; // i n Rs .
13 P5 =5000; // i n Rs .
14 // T o t a l p r o f i t b e f o r e d e p r e c i a t i o n
15 Pbd = P1 + P2 + P3 + P4 + P5 ; // i n Rs .
16 disp ( Pbd , T o t a l p r o f i t b e f o r e d e p r e c i a t i o n ( i n Rs ) :
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)
AvgP = Pbd /5; // A v e r a g e p r o f i t p e r annum
disp ( AvgP , A v e r a g e p r o f i t p e r annum ( i n Rs . ) : )
// T o t a l D e p r e c i a t i o n o f t h e machine
TotDep = CostofMac - SalvageValue
disp ( TotDep , T o t a l D e p r e c i a t i o n o f t h e machine ( i n Rs
. ) : )
// A v e r a g e D e p r e c i a t i o n p e r annum
AvgD = TotDep /5;
disp ( AvgD , A v e r a g e D e p r e c i a t i o n p e r annum ( i n Rs . ) :
)
// A v e r a g e a n n u a l p r o f i t a f t e r D e p r e c i a t i o n
AvgPafterDepreciation = AvgP - AvgD ;
disp ( AvgPafterDepreciation , A v e r a g e a n n u a l p r o f i t
a f t e r D e p r e c i a t i o n ( i n Rs . ) : )
// Return on o r i g i n a l i n v e s t m e n t
ReturnOnOrg =( AvgPafterDepreciation / CostofMac ) *100; //
in %
disp ( ReturnOnOrg , Return on o r i g i n a l i n v e s t m e n t ( i n %
) : )
// Return on a v e r a g e i n v e s t m e n t
ReturnOnAvgInv =( AvgPafterDepreciation /(( CostofMac +
SalvageValue ) /2) ) *100; // i n %
disp ( ReturnOnAvgInv , Return on a v e r a g e i n v e s t m e n t ( i n
%) : )
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clear ;
close ;
// g i v e n d a t a :
// I n i t i a l I n v e s t m e n t
InINv =25000; // i n Rs .
// S c r a p V a l u e
ScrapValue =5000 // i n Rs .
// P r o f i t b e f o r e t a x and D e p r e c i a t i o n
P1 =5000; // i n Rs
P2 =6000; // i n Rs
P3 =7000; // i n Rs
P4 =8000; // i n Rs
P5 =10000; // i n Rs
// T o t a l P r o f i t
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs .
// A v e r a g e P r o f i t
AvgP = P /5; // i n Rs .
// T o t a l D e p r e c i a t i o n by s t r a i g h t l i n e method
D =4000*5; // i n Rs .
// A v e r a g e D e p r e c i a t i o n
AvgD = D /5; // i n Rs
// Net i n c o m e b e f o r e t a x
NetIncomebefTax = AvgP - AvgD ;
// Tax 50%
Tax =( NetIncomebefTax *50) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
NetInc = NetIncomebefTax - Tax ; // i n RS .
// A v e r a g e I n v e s t m e n t
AvgInv =( InINv + ScrapValue ) /2; // i n Rs .
disp ( AvgInv , A v e r a g e I n v e s t m e n t i n Rs . : )
// A v e r a g e r a t e o f r e t u r n on a v e r a g e I n v e s t m e n t
ARR =( NetInc / AvgInv ) *100; // i n %
disp ( ARR , A v e r a g e r a t e o f r e t u r n on a v e r a g e
Investment in % : )
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Depreciation
I1 =13375; // i n Rs .
I2 =15375; // i n Rs .
I3 =17375; // i n Rs .
I4 =19375; // i n Rs .
I5 =21375; // i n Rs .
// T o t a l Income
I = I1 + I2 + I3 + I4 + I5 ; // i n Rs .
// a v e r a g e i n c o m e b e f o r e t a x and d e p r e c i a t i o n
AvgI = I /5; // i n RS .
// D e p r e c i a t i o n by s t r a i g h t l i n e
D =( OrgCost - Salvage ) /5; // i n Rs
// A v e r a g e Income a f t e r D e p r e c i a t i o n
AvgID = AvgI - D ; // i n Rs .
// Tax by 60 %
Tax =( AvgID *60) /100; // i n Rs
// Income a f t e r t a x and d e p r e c i a t i o n
AvgITD = AvgID - Tax ; // i n Rs
// A v e r a g e Rate o f Return
ARR =( AvgITD /(( OrgCost + Salvage ) /2+ AddInv ) ) *100; // i n
Rs
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g r e a t e r t h a n 1 , t h e p r o p o s a l can be a c c e p t e d . )
// Net p r o f i t a b i l i t y
NPVI = NPV / ICO ;
disp ( NPVI , Net p r o f i t a b i l i t y o f t h e p r o j e c t i s : )
disp ( As Net P r o f i t a b i l i t y I n d e x o f t h e p r o j e c t i s +
ve , t h e p r o p o s a l may be a c c e p t e d . )
// Exa 10
clc ;
clear ;
close ;
// g i v e n d a t a :
// i n i t i a l c a s h o u t f l o w s
ICO =40000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h y e a r s i s same
CIF =16000; // i n Rs .
//PV F a c t o r
PV = ICO / CIF ; // u n i t l e s s
disp ( PV , PV f a t o r o f t h e p r o j e c t i s : )
disp ( T h i s v a l u e i s i n b e t w e e n 2 . 4 9 3 6 and 2 . 5 8 8 7 ) ;
disp ( Hence IRR o f t h e p r o j e c t i s e x p e c t e d t o l i e
b e t w e e n 20% and 22% )
//PV o f c a s h i n f l o w s a t 20%
PV20 = CIF *2.5887; // i n Rs
PV22 = CIF *2.4936; // i n Rs
disp ( PV20 , a t 20% PV o f c a s h i n f l o w s ( i n Rs ) i s : )
disp ( PV22 , a t 22% PV o f c a s h i n f l o w s ( i n Rs ) i s : )
//By i n t e r p o l a t i o n
LDR =20; // i n % ; Lower d i s c o u n t r a t e
HDR =22; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =41419; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
P2 =39898; // i n Rs ; P r e s e n t v a l u e a t h i g h e r r a t e o f
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interest
25 IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
Internal rate of return
26 disp ( IRR , I n t e r n a l r a t e o f r e t u r n o f t h e p r o j e c t ( i n
%) : )
// Exa 11
clc ;
clear ;
close ;
// g i v e n d a t a :
// i n i t i a l c a s h o u t f l o w s
ICO =10000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd and 3 r d y e a r s
CIF1 =5000; // i n Rs .
CIF2 =4000; // i n Rs .
CIF3 =3000; // i n Rs .
// a v e r a g e a n n u a l CIF
CIF =( CIF1 + CIF2 + CIF3 ) /3; // i n Rs
// s t e p 1 : c a l c u l a t e f i r s t t r i a l r a t e
PV = ICO / CIF ; // u n i t l e s s
disp ( PV , T r i a l PV f a c t o r i s : )
disp ( The r a t e o f r e t u r n a t t h i s PV i s a p p r o x i m a t e l y
10% )
//P . V f a c t o r a t 10% r a t e o f d i s c o u n t
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
// T o t a l P r e s e n t V a l u e
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27 P = P1 + P2 + P3 ; // i n Rs
28 disp (P , t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t 10%
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r a t e i s : )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
10% r a t e i s 1 0 1 0 2 RS . i s more t h a n t h e c o s t o f
investment . )
disp ( The n e x t t r i a l r a t e can be t a k e n a s 12%. )
//P . V f a c t o r a t 12% r a t e o f d i s c o u n t
PV1 =0.893;
PV2 =0.797;
PV3 =0.712;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 ; // i n Rs
disp (P , t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t 12%
r a t e i s : )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
12% r a t e i s 9 7 8 9 RS . i s l e s s t h a n t h e c o s t o f
investment . )
// IRR w i l l be c a l c u l a t e d by i n t e r p o l a t i o n o f t h e s e
two r a t e s
LDR =10; // i n % ; Lower d i s c o u n t r a t e
HDR =12; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =10102; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
P2 =9789; // i n Rs ; P r e s e n t v a l u e a t h i g h e r r a t e o f
interest
IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
Internal rate of return
disp ( IRR , I n t e r n a l r a t e o f r e t u r n o f t h e p r o j e c t ( i n
%) : )
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// Exa 12
clc ;
clear ;
close ;
// g i v e n d a t a :
// i n i t i a l c a s h o u t f l o w s
ICO =70000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5 t h y e a r s
CIF1 =50000; // i n Rs .
CIF2 =40000; // i n Rs .
CIF3 =20000; // i n Rs .
CIF4 =10000; // i n Rs .
CIF5 =10000; // i n Rs .
//P . V f a c t o r a t 35% r a t e o f d i s c o u n t
PV1 =0.741;
PV2 =0.549;
PV3 =0.406;
PV4 =0.301;
PV5 =0.223;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
35% r a t e i s 7 2 3 7 0 RS . i s more t h a n t h e c o s t o f
investment . )
disp ( The n e x t t r i a l r a t e can be t a k e n a s 40%. )
//P . V f a c t o r a t 40% r a t e o f d i s c o u n t
PV1 =0.714;
PV2 =0.510;
PV3 =0.364;
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PV4 =0.260;
PV5 =0.186;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
40% r a t e i s 6 7 8 4 0 RS . i s l e s s t h a n t h e c o s t o f
investment . )
// IRR w i l l be c a l c u l a t e d by i n t e r p o l a t i o n o f t h e s e
two r a t e s
LDR =35; // i n % ; Lower d i s c o u n t r a t e
HDR =40; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =72370; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
P2 =67840; // i n Rs ; P r e s e n t v a l u e a t h i g h e r r a t e o f
interest
IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
Internal rate of return
disp ( IRR , I n t e r n a l r a t e o f r e t u r n o f t h e p r o j e c t ( i n
%) : )
// Minimum d e s i r e d r a t e o f r e t u r n f i x e d by management
i s 25%
disp ( As t h e c a l c u l a t e d IRR i s g r e a t e r t h a n t h e
minimum f i x e d r a t e . P r o j e c t s h o u l d be a c e p t e d . )
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3 clear ;
4 close ;
5 // g i v e n d a t a :
6 // i n i t i a l c a s h o u t f l o w s
7 ICO =80000; // i n Rs .
8 // c a s h i n f l o w s o f 10 y e a r s
9 CIF1 =14000; // i n Rs .
10 CIF2 =14000; // i n Rs .
11 CIF3 =14000; // i n Rs .
12 CIF4 =14000; // i n Rs .
13 CIF5 =14000; // i n Rs .
14 CIF6 =16000; // i n Rs .
15 CIF7 =20000; // i n Rs .
16 CIF8 =30000; // i n Rs .
17 CIF9 =20000; // i n Rs .
18 CIF10 =8000; // i n Rs .
19 // Cummulative c a s h i n f l o w s o f 10 y e a r s
20 CumCIF1 =14000; // i n Rs .
21 CumCIF2 =28000; // i n Rs .
22 CumCIF3 =42000; // i n Rs .
23 CumCIF4 =560000; // i n Rs .
24 CumCIF5 =70000; // i n Rs .
25 CumCIF6 =86000; // i n Rs .
26 CumCIF7 =106000; // i n Rs .
27 CumCIF8 =136000; // i n Rs .
28 CumCIF9 =156000; // i n Rs .
29 CumCIF10 =164000; // i n Rs .
30 disp ( I n t h e t a b l e i t can be s e e n t h a t i n 5 y e a r s
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7 0 0 0 0 Rs h a s b e e n r e c o v e r e d , Rs . 1 0 0 0 0 i s l e f t
out o f i n i t i a l investment . )
disp ( Payback p e r i o d i s b e t w e e n 5 and 6 y e a r s . )
E =5;
B =80000 -70000; // r e m a i n i n g b a l a n c e t o be r e c o v e r e d
C =16000; // c a s h f l o w o f l a s t payback y e a r
PaybackPeriod = E + B / C ;
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t ( i n
y e a r s ) i s : );
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44
) i s : )
// A v e r a g e a n n u a l c a s h i n f l o w
AvgCIF = CIF10 /10; // i n Rs
// Annual D e p r e c i a t i o n
ScrapValue =0;
ADep =( ICO - ScrapValue ) /10; // i n Rs
// A v e r a g e i n v e s t m e n t
AvgInv =( ICO + ScrapValue ) /2; // i n Rs
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//P . V f a c t o r a t 10% r a t e o f d i s c o u n t
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
PV4 =0.683;
PV5 =0.621;
PV6 =0.564;
PV7 =0.513;
PV8 =0.467;
PV9 =0.424;
PV10 =0.386;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P6 = CIF6 * PV6 ; // i n Rs
P7 = CIF7 * PV7 ; // i n Rs
P8 = CIF8 * PV8 ; // i n Rs
P9 = CIF9 * PV9 ; // i n Rs
P10 = CIF10 * PV10 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 + P6 + P7 + P8 + P9 + P10 ; // i n Rs
disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
// Net P r e s e n t V a l u e a t 10% d i s c o u n t r a t e
NPV =P - ICO ; // i n Rs
disp ( NPV , Net P r e s e n t V a l u e a t 10% d i s c o u n t r a t e i s
: )
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4 close ;
5 // g i v e n d a t a :
6 // i n i t i a l c a s h o u t f l o w s
7 ICO =80000; // i n Rs .
8 // T o t a l P r e s e n t V a l u e c a l c u l a t e d i n Exa13 . 3
9 P =97922; // i n Rs
10 disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
11 // P r o f i t a b i l i t y I n d e x a t 10% d i s c o u n t r a t e
12 PI = P / ICO ; // u n i t l e s s
13 disp ( PI , P r o f i t a b i l i t y I n d e x a t 10% d i s c o u n t
: )
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o f 10 y e a r s
rate is
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CumCIF3 =42000; // i n Rs .
CumCIF4 =560000; // i n Rs .
CumCIF5 =70000; // i n Rs .
CumCIF6 =86000; // i n Rs .
CumCIF7 =106000; // i n Rs .
CumCIF8 =136000; // i n Rs .
CumCIF9 =156000; // i n Rs .
CumCIF10 =164000; // i n Rs .
//P . V f a c t o r a t 15% r a t e o f d i s c o u n t
PV1 =0.870;
PV2 =0.756;
PV3 =0.658;
PV4 =0.572;
PV5 =0.497;
PV6 =0.432;
PV7 =0.376;
PV8 =0.327;
PV9 =0.284;
PV10 =0.247;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P6 = CIF6 * PV6 ; // i n Rs
P7 = CIF7 * PV7 ; // i n Rs
P8 = CIF8 * PV8 ; // i n Rs
P9 = CIF9 * PV9 ; // i n Rs
P10 = CIF10 * PV10 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 + P6 + P7 + P8 + P9 + P10 ; // i n Rs
disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
// IRR By i n t e r p o l a t i o n
LDR =10; // i n % ; Lower d i s c o u n t r a t e
HDR =15; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =97922; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
48
59 P2 =78840; // i n Rs ;
interest
60 IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
61
i n v e s t m e n t i n Rs . and e q u a l
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
IBT2 = CBFT2 - D ; // i n Rs .
IBT3 = CBFT3 - D ; // i n Rs .
IBT4 = CBFT4 - D ; // i n Rs .
IBT5 = CBFT5 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
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1 // Exa 1 4 ( i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
i n v e s t m e n t i n Rs . and e q u a l
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
IBT2 = CBFT2 - D ; // i n Rs .
IBT3 = CBFT3 - D ; // i n Rs .
IBT4 = CBFT4 - D ; // i n Rs .
IBT5 = CBFT5 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
IATD =( IATD1 + IATD2 + IATD3 + IATD4 + IATD5 ) /5; // i n Rs .
// A v e r a g e I n v e s t m e n t
AvgInv =( inINV + salvage ) /2; // i n Rs
// Annual c a s h i n f l o w s
ACI1 = IATD1 + D ; // i n RS
ACI2 = IATD2 + D ; // i n RS
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ACI3 = IATD3 + D ; // i n RS
ACI4 = IATD4 + D ; // i n RS
ACI5 = IATD5 + D ; // i n RS
// P r o j e c t A : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 = ACI1 ; // i n Rs .
CumCIF2 = ACI1 + ACI2 ; // i n Rs .
CumCIF3 = ACI1 + ACI2 + ACI3 ; // i n Rs .
CumCIF4 = ACI1 + ACI2 + ACI3 + ACI4 ; // i n Rs .
CumCIF5 = ACI1 + ACI2 + ACI3 + ACI4 + ACI5 ; // i n Rs .
// p a r t ( i i ) c a l c u l a t i o n o f ARR
ARR =( IATD / AvgInv ) *100; // i n %
disp ( ARR , P a r t ( i i ) A v e r a g e r a t e o f r e t u r n ( i n %) :
)
i n v e s t m e n t i n Rs . and e q u a l
years
CBFT1 =10000; // i n
CBFT2 =11000; // i n
CBFT3 =14000; // i n
CBFT4 =15000; // i n
Rs .
Rs .
Rs .
Rs .
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CBFT5 =25000; // i n Rs .
// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
IBT2 = CBFT2 - D ; // i n Rs .
IBT3 = CBFT3 - D ; // i n Rs .
IBT4 = CBFT4 - D ; // i n Rs .
IBT5 = CBFT5 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
IATD =( IATD1 + IATD2 + IATD3 + IATD4 + IATD5 ) /5; // i n Rs .
// A v e r a g e I n v e s t m e n t
AvgInv =( inINV + salvage ) /2; // i n Rs
// Annual c a s h i n f l o w s
ACI1 = IATD1 + D ; // i n RS
ACI2 = IATD2 + D ; // i n RS
ACI3 = IATD3 + D ; // i n RS
ACI4 = IATD4 + D ; // i n RS
ACI5 = IATD5 + D ; // i n RS
// P r o j e c t A : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 = ACI1 ; // i n Rs .
CumCIF2 = ACI1 + ACI2 ; // i n Rs .
CumCIF3 = ACI1 + ACI2 + ACI3 ; // i n Rs .
CumCIF4 = ACI1 + ACI2 + ACI3 + ACI4 ; // i n Rs .
CumCIF5 = ACI1 + ACI2 + ACI3 + ACI4 + ACI5 ; // i n Rs .
// p a r t ( i i i ) c a l c u l a t i o n o f Net P r e s e n t v a l u e
//PV a t 10%
//P . V f a c t o r a t 10% r a t e o f d i s c o u n t
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
PV4 =0.683;
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54 PV5 =0.621;
55 // P r e s e n t v a l u e
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f o r a l l c a s h i n f l o w s a t 10%
d i s c o u n t Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
// Net P r e s e n t V a l u e
NPV =P - inINV ; // i n Rs
disp ( NPV , P a r t ( i i i ) Net P r e s e n t V a l u e i s : )
i n v e s t m e n t i n Rs . and e q u a l
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// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
IBT2 = CBFT2 - D ; // i n Rs .
IBT3 = CBFT3 - D ; // i n Rs .
IBT4 = CBFT4 - D ; // i n Rs .
IBT5 = CBFT5 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
IATD =( IATD1 + IATD2 + IATD3 + IATD4 + IATD5 ) /5; // i n Rs .
// A v e r a g e I n v e s t m e n t
AvgInv =( inINV + salvage ) /2; // i n Rs
// Annual c a s h i n f l o w s
ACI1 = IATD1 + D ; // i n RS
ACI2 = IATD2 + D ; // i n RS
ACI3 = IATD3 + D ; // i n RS
ACI4 = IATD4 + D ; // i n RS
ACI5 = IATD5 + D ; // i n RS
// P r o j e c t A : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 = ACI1 ; // i n Rs .
CumCIF2 = ACI1 + ACI2 ; // i n Rs .
CumCIF3 = ACI1 + ACI2 + ACI3 ; // i n Rs .
CumCIF4 = ACI1 + ACI2 + ACI3 + ACI4 ; // i n Rs .
CumCIF5 = ACI1 + ACI2 + ACI3 + ACI4 + ACI5 ; // i n Rs .
// p a r t ( i v ) P r o f i t a b i l i t y i n d e x a t 10% d i s c o u n t r a t e
PI = P / inINV ; // u n i t l e s s
disp ( PI , P a r t ( i v ) P r o f i t a b i l i t y i n d e x a t 10%
d i s c o u n t r a t e : );
1 // Exa 1 4 ( v )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
i n v e s t m e n t i n Rs . and e q u a l
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
IBT2 = CBFT2 - D ; // i n Rs .
IBT3 = CBFT3 - D ; // i n Rs .
IBT4 = CBFT4 - D ; // i n Rs .
IBT5 = CBFT5 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
IATD =( IATD1 + IATD2 + IATD3 + IATD4 + IATD5 ) /5; // i n Rs .
// A v e r a g e I n v e s t m e n t
AvgInv =( inINV + salvage ) /2; // i n Rs
// Annual c a s h i n f l o w s
ACI1 = IATD1 + D ; // i n RS
ACI2 = IATD2 + D ; // i n RS
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ACI3 = IATD3 + D ; // i n RS
ACI4 = IATD4 + D ; // i n RS
ACI5 = IATD5 + D ; // i n RS
// P r o j e c t A : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 = ACI1 ; // i n Rs .
CumCIF2 = ACI1 + ACI2 ; // i n Rs .
CumCIF3 = ACI1 + ACI2 + ACI3 ; // i n Rs .
CumCIF4 = ACI1 + ACI2 + ACI3 + ACI4 ; // i n Rs .
CumCIF5 = ACI1 + ACI2 + ACI3 + ACI4 + ACI5 ; // i n Rs .
// p a r t ( v ) I n t e r n a l Rate o f r e t u r n
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
10% r a t e i s 4 5 3 5 2 RS . i s l e s s t h a n t h e c o s t o f
investment . )
disp ( The n e x t t r i a l r a t e can be t a k e n a s 8%. )
//PV a t 8%
//P . V f a c t o r a t 8% r a t e o f d i s c o u n t
PV1 =0.926;
PV2 =0.857;
PV3 =0.794;
PV4 =0.735;
PV5 =0.681;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s a t 8% d i s c o u n t
Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp (P , T o t a l P r e s e n t V a l u e a t 8% d i s c o u n t r a t e . )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
8% r a t e i s 4 7 9 9 6 RS . i s l e s s t h a n t h e c o s t o f
investment . )
disp ( The n e x t t r i a l r a t e can be t a k e n a s 6%. )
//PV a t 6%
//P . V f a c t o r a t 6% r a t e o f d i s c o u n t
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PV1 =0.943;
PV2 =0.890;
PV3 =0.840;
PV4 =0.792;
PV5 =0.747;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s a t 6% d i s c o u n t
Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
6% r a t e i s 5 0 8 5 7 RS . i s more t h a n t h e c o s t o f
investment . )
// IRR w i l l be c a l c u l a t e d by i n t e r p o l a t i o n o f t h e s e
two r a t e s 6% and 8%
LDR =6; // i n % ; Lower d i s c o u n t r a t e
HDR =8; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =50857; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
P2 =47996; // i n Rs ; P r e s e n t v a l u e a t h i g h e r r a t e o f
interest
IRR = LDR +(( P1 - inINV ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
Internal rate of return
disp ( IRR , P a r t ( v ) I n t e r n a l r a t e o f r e t u r n o f t h e
p r o j e c t ( i n %) : )
58
Chapter 5
Analysis of public projects
Scilab code Exa 5.2 Demonstrate use of annual present and future worth
operation
1 // Exa 2
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 IC =1500000; // i n Rupees
7 OMC =65000; // i n Rupees ( a n n u a l c o s t
8
9
10
11
12
13
14
15
16
17
18
19
f o r o p e r a t i n g and
maintenance )
B =225000; // i n Rupees ( a n n u a l s a v i n g and b e n e f i t s
ScrapValue =300000; // i n Rupees
life =30; // i n y e a r s
Irate =8; // i n %
// // u s i n g p r e s e n t worth // //
// c a l c u l a t i n g p r e s e n t worth o f s a v i n g s
PWbenefits1 =0;
for i =1:30
PWbenefits1 = PWbenefits1 + B /(1+ Irate /100) ^ i ;
end
// c a l c u l a t i n g p r e s e n t worth o f s c r a p v a l u e
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35
36 // // u s i n g f u t u r e worth // //
37 // c a l c u l a t i n g f u t u r e worth o f s a v i n g s
38 FWbenefits1 =0;
39 for i =1:30
40
FWbenefits1 = FWbenefits1 + B *(1+ Irate /100) ^( life - i )
;
41 end
42 // c a l c u l a t i n g f u t u r e worth o f s c r a p v a l u e
43
44 FWbenefits2 = ScrapValue ;
45 FWbenefits = FWbenefits1 + FWbenefits2 ; // t o t a l
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future
worth o f b e n e f i t s
disp ( FWbenefits , F u t u r e worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g F u t u r e worth o f c o s t
FWcost1 = IC *(1+ Irate /100) ^ life ; // t h e i n i t i a l c o s t
// c a l c u l a t i n g f u t u r e worth o f o p e r a t i n g and
maintenance c o s t
FWcost2 =0;
for i =1:30
60
52
FWcost2 = FWcost2 + OMC *(1+ Irate /100) ^( life - i ) ;
53 end
54 FWcost = FWcost1 + FWcost2 ; // t o t a l f u t u r e worth o f c o s t
55 disp ( FWcost , F u t u r e worth o f t h e c o s t ) ;
56 BCratio = FWbenefits / FWcost ; // f o r m u l a
57 disp ( BCratio , B C r a t i o u s i n g f u t u r e worth i s : )
58
59
60 // // u s i n g a n n u a l worth // //
61 // c a l c u l a t i n g a n n u a l worth o f s a v i n g s
62 AWbenefits1 =0;
63 for i =1:30
64
AWbenefits1 = AWbenefits1 + B *(1+ Irate /100) ^( life - i )
;
65 end
66 // c a l c u l a t i n g a n n u a l worth o f s c r a p v a l u e
67
68 AWbenefits2 = ScrapValue ;
69 AWbenefits = AWbenefits1 + AWbenefits2 ; // t o t a l Annual
70
71
72
73
74
75
76
77
78
79
80
81
82
83
worth o f b e n e f i t s
disp ( AWbenefits , Annual worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g Annual worth o f c o s t
AWcost1 = IC *(1+ Irate /100) ^ life ; // t h e i n i t i a l c o s t
// c a l c u l a t i n g a n n u a l worth o f o p e r a t i n g and
maintenance c o s t
AWcost2 =0;
for i =1:30
AWcost2 = AWcost2 + OMC *(1+ Irate /100) ^( life - i ) ;
end
AWcost = AWcost1 + AWcost2 ; // t o t a l a n n u a l worth o f c o s t
disp ( AWcost , Annual worth o f t h e c o s t ) ;
BCratio = AWbenefits / AWcost ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g Annual worth i s : )
disp ( I t can be s e e n t h a t B/C r a t i o i s same . )
// Note : a n s w e r g i v e n i n t h e book i s n o t a s much
a c c u r a t e a s c a l c u l a t e d by s c i l a b
61
f o r o p e r a t i n g and
maintenance )
8 B =225000; // i n Rupees ( a n n u a l s a v i n g and b e n e f i t s
9 ScrapValue =300000; // i n Rupees
10 life =30; // i n y e a r s
11 Irate =8; // i n %
12 // c a l c u l a t i n g p r e s e n t worth o f s a v i n g s
13 PWbenefits1 =0;
14 for i =1:30
15
PWbenefits1 = PWbenefits1 + B /(1+ Irate /100) ^ i ;
16 end
17 // c a l c u l a t i n g p r e s e n t worth o f s c r a p v a l u e
18
19 PWbenefits2 = B /(1+ Irate /100) ^ life ;
20 PWbenefits = PWbenefits1 + PWbenefits2 ; // t o t a l p r e s e n t
21
22
23
24
25
26
27
28
29
worth o f b e n e f i t s
disp ( PWbenefits , P r e s n t worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g p r e s e n t worth o f c o s t
PWcost1 = IC ; // same t h e i n i t i a l c o s t
// c a l c u l a t i n g p r e s e n t worth o f o p e r a t i n g and
maintenance c o s t
PWcost2 =0;
for i =1:30
PWcost2 = PWcost2 + OMC /(1+ Irate /100) ^ i ;
end
PWcost = PWcost1 + PWcost2 ; // t o t a l p r e s e n t worth o f
62
30
31
32
33
34
35
36
37
cost
disp ( PWcost , P r e s n t worth o f t h e c o s t ) ;
// // u s i n g c o n v e n t i o n a l B/C r a t i o // //
BCratio = PWbenefits / PWcost ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g c o n v e n t i o n a l method i s :
)
// // u s i n g m o d i f i e d B/C r a t i o // //
BCratio =( PWbenefits - PWcost2 ) / IC ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g c o n v e n t i o n a l method i s :
)
63
Chapter 8
Product Process and Operation
Costing
Scilab code Exa 8.1 Process account and Abnormal Loss Acount
1 // Exa1
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 Production =1000 // u n i t s
7 CostOfProduction =1850; // i n Rs .
8 NormalLoss =10 // i n %
9 ActualLoss =150; // i n U n i t s
10 ScrapValue =50; // i n P a i s e / u n i t
11 NLoss = Production * NormalLoss /100; // i n U n i t s
12 UnitsProduced = Production - NLoss ; // i n U n i t s
13 CostPerUnit =( CostOfProduction -50*10^ -2* NLoss ) /
14
15
16
17
UnitsProduced ; // i n Rs .
AbnormalLoss = ActualLoss - NLoss ; // i n U n i t s
CostOfAbnormalLoss = AbnormalLoss * CostPerUnit ; // i n Rs .
disp ( P r o c e s s a c c o u n t : ) ;
disp ( P r o d u c t i o n i n U n i t s = + string ( Production ) +
Amount i n Rs . + string ( CostOfProduction ) ) ;
64
18
19
20
21
22
23
24
25
14
15
16
17
18
19
disp ( No . o f u n i t s c o m p l e t e d d u r i n g t h e month : ) ;
disp ( U n i t s Put i n t o p r o c e s s + string (
ProcessDuringMonth ) ) ;
disp ( LESS : U n i t s n o t c o m p l e t e d + string (
WorkComplete31jan ) ) ;
disp ( C l o s i n g s t o c k o f worki n p r o c e s s + string (
ProcessDuringMonth - WorkComplete31jan ) ) ;
disp ( 50% c o m p l e t e d d u r i n g t h e month = 500 ) ;
disp ( E q u i v a l e n t P r o d u c t i o n = 1080+19000+500 = 2 0 5 8 0
);
Scilab code Exa 8.3 Calculation of effective production and process cost
sheet
1 // Exa3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 MaterialsCost =1800; // i n Rs .
7 LabourCost =1700; // i n Rs .
8 Overhead =500; // i n Rs .
9 TotalCost = MaterialsCost + LabourCost + Overhead ; // i n Rs .
10 MaterialsPurchaseCost =37500; // i n Rs .
11 WagesAmounted =39900; // i n Rs .
12 OverheadAmounted =10640; // i n Rs .
13 ActualMaterialCost =34250; // i n Rs .
14 FinishedProduction =1250; // i n U n i t s
15 work_in_processInventory =250; // i n U n i t s
16
17 disp ( S t a t e m e n t o f P r o d u c t i o n : ) ;
18 disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
19 disp (
Units
Overhead
Incomplete
Total );
Material
66
Labour
1420
1420
1420 );
disp ( LESS : C l o s i n g S t o c k
250
20%
50 ) ;
24 disp (
23
25
40%
disp (
26
1370
1320
disp ( C u r r e n t C o s t
27
34250
39900
10640 );
disp ( C u r r e n t C o s t p e r u n i t
25
28
29
30
31
32
33
34
35
36
37
38
39
40
100
30.23
100 ) ;
1320 );
8.06
6 3 . 2 9 );
disp ( ) ;
disp ( C o s t o f o p e n i n g worki n p r o c e s s f o r c o m p l e t i o n
(200 u n i t s ) );
MaterialsToComplete =120*25; // i n Rs .
LabourToComplete =120*30.23; // i n Rs .
OverheadsToComplete =120*25; // i n Rs .
Total = MaterialsToComplete + floor ( LabourToComplete ) +
floor ( OverheadsToComplete ) ; // i n Rs .
//Worki n p r o c e s s a s on 1 s t Jun
WorkInJun =4000; // i n Rs .
CurrentProduction =(1250 -200) *63.29; // i n Rs .
// C o s t o f Worki n p r o c e s s 30 t h Jun ( 2 5 0 U n i t s )
MaterialC =200*25; // i n Rs .
LabourC =150*30.23; // i n Rs .
67
41
42
43
44
45
46
47
48
49
50
51
52
53
54
OverheadC =150*8.06; // i n Rs .
disp ( C o s t o f Worki n p r o c e s s 30 t h Jun ( 2 5 0 U n i t s ) :
);
disp ( C o s t s f o r : ) ;
disp ( M a t e r i a l : + string ( MaterialC ) ) ;
disp ( Labour : + string ( LabourC ) ) ;
disp ( Overhead : + string ( OverheadC ) ) ;
disp ( ) ;
disp ( P r o c e s s C o s t S h e e t ( Given i n T a b u l a r r form
below ) : );
disp ( S t a t e m e n t o f P r o d u c t i o n : ) ;
disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
disp ( P a r t i c u l a r s
Units
completion
Total Cost
C o s t Per
Unit );
disp ( Opening Worki n P r o c e s s ) ;
disp ( M a t e r i a l s
200
40%
1800 );
disp ( Labour
1700 );
55 disp ( Overhead
500
4000 );
56 disp ( I n p u t added : ) ;
57 disp ( M a t e r i a l s
1300
58 disp ( Labour
59
39900 );
disp ( Overhead
60
10640
disp (
34250 );
84790 );
88790 )
61 disp ( LESS : C l o s i n g worki n p r o c e s s
);
68
250
62
disp ( M a t e r i a l s
80%
63 disp ( Labour
5000 );
60%
64 disp ( Overhead
4534 );
60%
1209
4 3 . 0 0 );
65 disp ( C o s t o f P r o d u c t i o n
1250
100%
62.44 )
10743
78047
Scilab code Exa 8.4 Calculation of effective production and process account
1 // Exa4
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 OpeningStock =10000; // i n U n i t s
7 MaterialsCost =2250; // i n Rs .
8 Wages =650; // i n Rs .
9 Overhead =400; // i n Rs .
10 UnitsIntroduced =40000; // i n U n i t s
11 MaterialsCost1 =9250; // i n Rs .
12 Wages1 =4600; // i n Rs .
13 Overhead1 =3100; // i n Rs .
14 disp ( C a l c u l a t i o n o f E q u i v a l e n t P r o d u c t i o n )
15 disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
16 disp (
17
Units
Materials
Labour and Overhead ) ;
disp ( Opening Worki n P r o c e s s
69
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
10000
10000
10000 );
disp ( U n i t s s t a r t e d and f i n i s h e d
20000
20000
20000 );
disp ( C l o s i n g worki n p r o c e s s
20000
20000
5000 );
disp ( M a t e r i a l 100% c o m p l e t e l a b o u r and o v e r h e a d 25%
)
disp ( E f f e c t i v e U n i t s
50000
50000
35000 )
disp ( ) ;
disp ( C o s t o f E q u i v a l e n t U n i t s u n d e r t h e a v e r a g e
c o s t method : ) ;
disp ( Element
Opening C o s t
C o s t put i n
Total Cost
Equivalent Production
C o s t Per U n i t ) ;
disp ( M a t e r i a l
2250
9250
11500
50000
0 . 2 3 );
disp ( Wages
650
4600
5250
35000
0 . 1 5 );
disp ( Overhead
400
3100
3500
35000
0 . 1 0 );
disp ( T o t a l ) ;
disp (
3300
16950
20250
0.48 )
// V a l u a t i o n o f worki n p r o c e s s ( 2 0 0 0 0 U n i t s
// l e t m a t e r i a l 100% c o m p l e t e = M1
M1 =20000*0.3; // i n Rs .
// l e t l a b o u r 25% c o m p l e t e = L1
L1 =5000*0.15; // i n Rs .
// l e t Overhead 25% c o m p l e t e = O1
O1 =5000*0.10; // i n Rs .
// T o t a l T1
T1 = M1 + L1 + O1 ; // i n Rs
// // c o s t o f f i n i s h e d g o o d s
70
40
41
42
43
44
45
46
47
48
49
50
51
52
53
Cost per a r t i c l e
Cost per
Total Cost
a r t i c l e Total Cost );
7 disp ( To m a t e r i a l s
62.50
15000
By P r o c e s s No . 2 Account
27600 );
8 disp ( To Labour
33.34
8000
( Output T r a n s f e r e d )
71
115.00 )
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
;
disp ( To D i r e c t E x p e n s e s
10.83
2600
);
disp ( To I n d i r e c t E x p e n s e s
8.33
2000 );
disp (
115.00
27600
115.00
27860 );
disp ( ) ;
disp ( P r o c e s s No . 2 ) ;
disp (
Cost per a r t i c l e
Total Cost
Cost per
a r t i c l e Total Cost );
disp ( To P r o c e s s No . 1 Account
115.00
27600
By P r o c e s s No . 3 Account
270.00
64800 )
disp ( To m a t e r i a l s
20.83
5000 );
disp ( To Labour
83.33
2000 );
disp ( To D i r e c t E x p e n s e s
30.00
7200 );
disp ( To I n d i r e c t E x p e n s e s
20.84
5000 );
disp (
270.00
84800
270.00
64800 );
disp ( ) ;
disp ( P r o c e s s No . 3 ) ;
disp (
Cost per a r t i c l e
Total Cost
Cost per
a r t i c l e Total Cost );
disp ( To P r o c e s s No . 2 Account
270.00
64800
By F i n i s h e d S t o c k Account
320.00
76800 )
disp ( To m a t e r i a l s
8.33
2000 );
disp ( To Labour
25.00
72
6000 );
27 disp ( To D i r e c t E x p e n s e s
2500 );
28 disp ( To I n d i r e c t E x p e n s e s
1500 );
29 disp (
76800
320.00
76800 );
10.42
6.25
320.00
Scilab code Exa 8.6 Various process account and finished stock account
1 // Exa6
2 clc ;
3 clear ;
4 close ;
5 disp ( Copra C r u s h i n g P r o c e s s Account ) ;
6 disp ( P a r t i c u l a r s
Tons
Amount
12
13
14
Particulars
disp ( To Copra Used
By s a l e o f c o p r a r e s i d u e
disp ( Labour
By L o s s
disp ( E l e c t r i c Power
Sale of copra sacks
disp ( Sundry M a t e i a l s
Cost o f crude o i l );
disp ( R e p a i r s t o M a c h i n e r y
Rs . 6 4 6 . 6 7 p e r t o n
disp ( Steam
disp ( F a c t o r y E x p e n s e s
disp (
15
16
17
disp ( ) ;
disp ( R e f i n i n g P r o c e s s Account ) ;
disp ( P a r t i c u l a r s
Tons
7
8
9
10
11
73
Tons
500
175
Amount ) ;
200000
11000 );
2500
25 ) ;
600
400 ) ;
100
280
300
194000 );
600 ) ;
1320 );
500
205400
500
205400 );
Amount
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Particulars
disp ( To Copra o i l
By s a l e o f byp r o d u c t s
disp ( Labour
By L o s s
disp ( E l e c t r i c Power
c o s t o f r e f i n i n g o i l );
disp ( Sundry M a t e i a l s
Rs . 7 6 8 . 2 p e r t o n
disp ( R e p a i r s t o M a c h i n e r y
disp ( Steam
disp ( F a c t o r y E x p e n s e s
disp (
Tons
300
45
Amount ) ;
194000
6750 );
1000
5);
360
250
300
300
2000
192050 );
330 ) ;
450 ) ;
660 ) ;
198800
198800 );
disp ( ) ;
disp ( F i n i s h i n g P r o c e s s Account ) ;
disp ( P a r t i c u l a r s
Tons
Amount
Particulars
Tons
Amount ) ;
disp ( To R e f i n i n g P r o c e s s
250
192050
By L o s s
2);
disp ( Labour
1500
c o s t o f f i n i s h e d o i l );
disp ( E l e c t r i c Power
240
Rs . 7 8 4 . 6 8 p e r t o n
248
194600 );
disp ( R e p a i r s t o M a c h i n e r y
140 ) ;
disp ( Steam
450 ) ;
disp ( F a c t o r y E x p e n s e s
220 ) ;
disp (
250
194600
250
198800 );
disp ( ) ;
disp ( F i n i s h e e d s t o c k a c c o u n t ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To f i n i s h i n g p r o c e s s
248
194600
To b a l a n c e a t Rs . 9 1 4 . 2
202100 );
disp ( To c o s t o f c a s k s
7500
);
disp (
202100
74
202100 );
Scilab code Exa 8.7 Process account and Abnormal wastage and gain
1 // Exa7
2 clc ;
3 clear ;
4 close ;
5 disp ( P r o c e s s A Account ) ;
6 disp ( P a r t i c u l a r s
Units
Particulars
Rupees ) ;
7 disp ( To u n i t s i s s u e d a t Rs . 1
10000
By n o r m a l w a s t a g e 3% o f 1 0 0 0 0
75 ) ;
8 disp ( p e r u n i t
Rupees
Units
10000
300
units sold
9
10
11
12
13
14
15
16
a t 25 P a i s a / u n i t ) ;
disp ( To s u n d r y m a t e r i a l s
By Abnormal w a s t a g e
350 ) ;
disp ( To l a b o u r
By p r o c e s s B o u t p u t t r a n s f e r e d
16625 );
disp ( To D i r e c t E x p e n s e s
disp (
10000
1000
200
5000
9500
1050 );
17050
10000
17050 );
disp ( ) ;
disp ( P r o c e s s B Account ) ;
disp ( P a r t i c u l a r s
Units
Rupees
Particulars
Units
Rupees ) ;
disp ( To P r o c e s s A ( o u t p u t r e c d . )
9500
16625
By n o r m a l w a s t a g e 5% o f 9 5 0 0 ) ;
75
17
18
19
20
21
22
23
24
25
26
27
28
disp (
u n i t s s o l d a t 50 P a i s a / u n i t
475
238 ) ;
disp ( To s u n d r y m a t e r i a l s
1500
By p r o c e s s ( o u t p u t t r a n s f . )
9100
27300 );
disp ( To wages
8000 );
disp ( To D i r e c t E x p e n s e s
1188 );
disp ( To Abnormal E f f e c t i v e o r ) ;
disp ( Abnormal g a i n s
75
225 )
disp (
9575
27538
9575
27538 );
disp ( ) ;
disp ( P r o c e s s C Account ) ;
disp ( P a r t i c u l a r s
Units
Rupees
Particulars
Units
Rupees ) ;
disp ( To P r o c e s s B ( o u t p u t r e c d . )
9100
27300
By n o r m a l w a s t a g e 8% o f 9 1 0 0 ) ;
disp (
32
u n i t s s o l d a t Rs . 1/ u n i t
728 ) ;
disp ( To s u n d r y m a t e r i a l s
disp ( To wages
By Abnormal Wastage
1156 );
disp ( To D i r e c t E x p e n s e s
By f i n i s h e d s t o c k ( o u t p u t )
34425 );
disp (
33
34
35
36309 );
// C a l c u l a t i o n o f Abnormal w a s t a g e and Abnormal Gain
// P r o c e s s A :
CostOfAbnormalWastageA =16975*200/9700; // i n Rupees
29
30
31
76
728
500 ) ;
6500
272
2009
8100
9100
36309
9100
36
37
38
39
40
41
42
43
44
45
// P r o c e s s B :
CostOfAbnormalWastageB =27075*75/9025; // i n Rupees
// P r o c e s s C :
CostOfAbnormalWastageC =35581*272/8372; // i n Rupees
disp ( CostOfAbnormalWastageA , P r o c e s s A : C o s t Of
Abnormal Wastage i n Rs . ) ;
disp ( CostOfAbnormalWastageB , P r o c e s s B : C o s t Of
Abnormal Wastage i n Rs . ) ;
disp ( CostOfAbnormalWastageC , P r o c e s s C : C o s t Of
Abnormal Wastage i n Rs . ) ;
disp ( ) ;
disp ( Abnormal w a s t a g e a c c o u n t ) ;
disp ( Dr .
Cr . ) ;
46 disp (
Units
Amount
Units
Amount ) ;
47 disp ( To P r o c e s s A
200
By s a l e s o f w a s t e d u n i t s : 200 ) ;
48 disp ( To P r o c e s s C
272
U n i t s o f A @ 25 p a i s a / u n i t
49 disp (
272 u n i t s o f P r o c e s s C @ Rs . 1/ u n i t
322 ) ;
50 disp (
By C o s t i n g P r o f i t & L o s s Account
1184 );
51 disp (
350
1156
50 ) ;
272
1506
1506 );
disp ( ) ;
disp ( Abnormal Gain Account ) ;
disp (
Units
Amount
Units
Amount ) ;
55 disp ( To s h o r t f a l l i n n o r m a l w a s t a g e o f 75
52
53
54
77
38
By P r o c e s s A
75
56 disp ( u n i t s @ 50 P a i s a / e a c h ) ;
57 disp ( To C o s t i n g P r o i t and L o s s Account
187 ) ;
58 disp (
225
225 ) ;
225 ) ;
Scilab code Exa 8.8 Computation of Equivalent and analysis of Cost sheet
1 // Exa7
2 clc ;
3 clear ;
4 close ;
5 disp ( 1 . S t a t e m e n t o f p r o d u c t i o n
6
7
8
9
10
11
12
13
14
15
16
17
18
19
u n i t s f o r June
2 0 1 0 : );
disp (
disp ( Completed U n i t s
disp ( (+) C l o s i n g worki n p r o c e s s
disp (
disp ( ( ) Opening worki n p r o c e s s
disp ( New U n i t s ( I n p u t )
disp ( ) ;
disp ( 2 . Computation o f e q u i v a l e n t ) ;
disp (
Units
Incomplete %
Materials
Overhead ) ;
disp ( ( i ) ) ;
disp ( W. I . P I n v e n t o r y on 1 s t June ( 4 0%
disp (
400
60%
240
;
disp ( Add : I n p u t
2600
2600
);
disp (
78
Units );
2500 );
500 ) ;
3000 );
400 ) ;
2600 );
Labour
complete ) );
240
240 )
2600
2600
36
3000
20%
2840
2840
2840
);
disp ( L e s s : W. I . P I n v e n t o r y on 30 t h June
500
40%
100
200
200 )
;
disp (
2500
2740
2640
2640
);
disp ( ) ;
disp ( S t a t e m e n t o f c o s t p e r u n i t ) ;
disp (
T o t a l Amoount
E q u i v a l e n t s Cost per );
disp (
( Rs . )
Units
U n i t Rs . )
disp ( M a t e r i a l s
68500
2740
2 5 . 0 0 );
disp ( Labour
79800
2640
3 0 . 2 3 );
disp ( Overhead
21280
2640
8 . 0 6 );
disp (
169580
63.29 )
disp ( ) ;
disp ( 3 . P r o c e s s c o s t f o r t h e month o f June 2 0 1 0 ) ;
disp (
Amount
per u n i t );
disp ( M a t e r i a l s ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
3600
2 2 . 5 0 );
disp ( Labour ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
3400
2 1 . 2 5 );
disp ( Overhead ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
1000
6.25 )
disp (
37
38
39
8000
5 0 . 0 0 );
disp ( ) ;
disp ( Put i n p r o c e s s ) ;
disp ( M a t e r i a l s ( 2 7 4 0 u n i t s )
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
79
40
41
42
43
44
45
46
47
48
49
50
51
52
68500
2 5 . 0 0 );
disp ( Wages ( 2 6 4 0 u n i t s )
79800
30.23 )
disp ( O v e r h e a d s ( 2 6 4 0 u n i t s )
21240
8 . 0 6 );
disp (
169580
6 3 . 2 9 );
disp (
Total
177580 );
disp ( ) ;
disp ( A n a l y s i s o f C o s t s h e e t ( FIFO ) ) ;
disp ( C o s t o f U n i t s Completed and t r a n s f e r e d
Units
Rate
Amount ) ;
disp (
Equivalent
Rs .
Rs . )
disp ( Worki n p r o g r e s s 1 s t June ( 4 0 0 u n i t s )
160
50.00
8000 );
disp ( M a t e r i a l s f o r c o m p l e t i n g
240
25.00
6000 );
disp ( Labour f o r c o m p l e t i n g
240
30.23
7252 );
disp ( Overhead f o r c o m p l e t i n g
240
8.06
1934 );
disp ( C o s t o f 400 u n i t s
23186
);
53 disp ( Put i n p r o c e s s and c o m p l e t e d ( 2 1 0 0 u n i t s )
6329
132909 );
54 disp ( C o s t o f 2 5 0 0 u n i t s
156095
);
55 disp ( V a l u a t i o n o f work i n p r o c e s s 30 t h j u n e ( 5 0 0
u n i t s ) );
56 disp ( M a t e r i a l s
400
25.00
10000 );
57 disp ( Labour
300
30.23
9068 );
58 disp ( Overhead
80
300
8.06
2417 )
59 disp ( C o s t o f 500 u n i t s (W. I . P)
21485 );
Total
disp (
P r o c e s s c o s t Rs . 1 7 7 5 8 0 )
61 disp ( ) ;
62 disp ( P r o c e s s C o s t Account ) ;
63 disp (
Units
Cost per
Amount
Units
Cost per
Amount )
;
64 disp (
unit
u n i t );
65 disp (
Rs .
Rs .
Rs .
Rs .
);
66 disp ( To W. I . P 1 s t June
400
50.00
8000
By f i n i s h e d
2500
62.44
156095
);
67 disp ( M a t e r i a l s
2600
25.00
68500
By s t o c k Account ) ;
68 disp ( Labour
30.23
79800
By W. I . P 30 t h June
500
42.97
21485
);
69 disp ( O v e r h e a d s
8.06
21280 )
;
70 disp (
3000
177580
3000
177580
);
60
Scilab code Exa 8.9 Output transfered and closing and opening work in
progress
1 // Exa9
2 clc ;
3 clear ;
81
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
close ;
disp (
Amount
Units );
disp ( P r o d u c t i o n
Units
%
Equivalent
%
E q u i v a l e n t );
disp (
Completion
Units
Completion
Units );
disp ( F i n i s h e d & T r a n s f e r e d
8000
100%
8000
100%
8000 );
disp ( C l o s i n g worki n p r o g r e s s 2 0 0 0
100%
2000
50%
1000 );
disp ( T o t a l P r o d u c t i o n
10000
10000
9000 );
disp ( ) ;
disp ( S t a t e m e n t o f c o s t ) ;
disp (
Material
Labour
Overhead
Total );
disp (
Rs .
Rs .
Rs .
Rs . ) ;
disp ( C o s t o f o p e n i n g worki n p r o g r e s s
7500
3000
1500
12000 );
disp ( C o s t i n and d u r i n g t h e p r o c e s s
100000
78000
39000
217000 );
disp (
Total cost
107500
81000
40500
229000 );
disp ( E q i v a l e n t u n i t s
10000
9000
9000 );
disp ( C o s t p e r u n i t
10.75
9.00
4.50
2 4 . 2 5 );
disp ( ) ;
disp (8000*24.25 , ( a ) V a l u e o f o u t p u t t r a n s f e r e d :
8 0 0 0 u n i t s @ Rs . 2 4 . 2 5 i s ) ;
disp ( ( b ) V a l u e o f C l o s i n g worki n p r o g r e s s ) ;
disp (2000*10.75 , M a t e r i a l
2000 u n i t s @ 1 0 . 7 5 : )
;
disp (1000*9.00 , Labour
1000 u n i t s @ 9 . 0 0 : );
disp (1000*4.50 , Overhead
1000 u n i t s @ 4 . 5 0 : );
disp (194000+35000 , T o t a l Rs . = ) ;
82
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
disp ( ( b ) I t s p o i l a g e o c c u r s a t t h e end o f t h e
p r o c e s s , i t s c o s t w i l l be c h a r g e d o n l y t o t h e
f i n i s h e d p r o d u c t i o n and n o t t o t h e c l o s i n g
i n v e n t o r y . );
disp ( The c a l c u l a t i o n w i l l be a s f o l l o w s : ) ;
disp ( E f f e c t i v e U n i t s
Material
Labour
Overhead ) ;
disp ( From :
)
disp ( Opening i n v e n t o r y
0
3000
3000 );
disp ( C u r r e n t i n p u t
7000
7000
7000 );
disp ( T o t a l c o m p l e t e u n i t s
7000
10000
10000 );
disp ( C l o s i n g i n v e n t o r y
5000
1000
1000 );
disp ( E f f e c t i v e u n i t s
12000
11000
11000 );
disp ( P r o c e s s c o s t
Rs .
27500
Rs . 5 0 0 0 0
Rs . 4 0 0 0 0 ) ;
disp ( P r o c e s s c o s t p e r u n i t
2.29
4.55
3 . 6 3 );
disp ( C l o s i n g i n v e n t o r y
Rs . ) ;
disp ( M a t e r i a l
5 0 0 0 x Rs . 2 . 2 9
=11450 ) ;
disp ( Labour
5 0 0 0 x Rs . 4 . 5 5 x 20% =4550 ) ;
disp ( Overhead
5 0 0 0 x Rs . 3 . 6 3 x 20% =3630 ) ;
disp (
=Rs . 1 9 6 3 0
);
disp (10000+117500 -19630 , C o s t o f m a t e r i a l s
t r a n s f e r e d t o s e c o n d p r o c e s s= Rs . ) ;
1 // Exa11
2 clc ;
3 clear ;
4 close ;
5 disp ( Dr .
A A/ c
6 disp (
7
disp (
disp ( To
By
9 disp ( To
By
10 disp ( To
11
disp (
8
Process
Cr . ) ;
Amount
Amount ) ;
Rs .
Rs . ) ;
M a t e r i a l Consumed
2000
c l o s i n g Stock
1000 );
Labour
3000
P r o c e s s B( o / p T r a n s f e r e d )
5000 );
P r o f i t ( 2 0% on t r a n s f e r p r i c e )
1000 )
6000
6000 );
disp ( ) ;
disp ( Dr .
B A/ c
14 disp (
12
13
15
16
17
18
19
20
21
22
23
Process
Cr . ) ;
Amount
Amount ) ;
disp (
Rs .
Rs . ) ;
disp ( To P r o c e s s A( T r a n s f e r o f o /p )
5000
By c l o s i n g S t o c k
2000
)
disp ( To M a t e r i a l
3000
By P r o c e s s C( o /p T r a n s f e r e d )
10000 );
disp ( To Labour
2000 );
disp ( To P r o f i t ( 2 0% on t r a n s f e r p r i c e )
2000 )
disp (
12000
12000 );
disp ( ) ;
disp ( Dr .
Process
C A/ c
Cr . ) ;
disp (
Amount
Amount ) ;
85
24
disp (
25
27
28
29
disp ( To P r o c e s s B( T r a n s f e r o f o / p )
By c l o s i n g S t o c k
)
disp ( To M a t e r i a l
By F i n i s h e d s t o c k ( o /p T r a n s f e r e d )
disp ( To Labour
disp ( To P r o f i t ( 2 0% on t r a n s f e r p r i c e )
disp (
30
31
32
disp ( ) ;
disp ( F i n i s h e d S t o c k Accouont ) ;
disp (
26
33
34
35
36
Rs .
Rs . ) ;
10000
3000
1000
15000 );
4000 );
3000 )
18000
18000 );
Amount
Amount ) ;
disp (
Rs .
Rs . ) ;
disp ( To P r o c e s s C( Output R e c i e v e d )
15000
By S a l e s
18000
)
disp ( To P r o f i t
5000
By C l o s i n g S t o c k
2000 );
disp (
20000
18000 );
disp ( To Raw m a t e r i a l
86
Tons
Tons
1000
Amount
Amount ) ;
200000
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
By w e i g h t l o s t
50 ) ;
disp ( To Mfg . wages & e x p e n s e s
87500
By S c r a p
50
2500 );
disp ( To p r o f i t
9960
By S a l e s
300
105000 );
disp (
By t r a n s f e r t o p r o c e s s i i
600
189960 );
disp (
1000
297460
1000
297460 );
disp ( ) ;
disp ( P r o c e s s ( i i ) Account ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To t r a n s f e r from p r o c e s s i
6000
189960
By w e i g h t l o s t
60 ) ;
disp ( To Mfg . wages & e x p e n s e s
39500
By S c r a p
30
1500 );
disp ( To p r o f i t
13525
By S a l e s
255
127500 );
disp (
By
t r a n s f e r to p r o c e s s i i
255
113985 );
disp (
1000
297460
600
242985 );
disp ( ) ;
disp ( P r o c e s s ( i i I ) Account ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To t r a n s f e r from p r o c e s s i i
255
113895
By w e i g h t l o s t
51 ) ;
disp ( To Mfg . wages & e x p e n s e s
10710
By S c r a p
51
2550 );
disp ( To p r o f i t
255
By S a l e s
153
122400 );
disp (
255
124950
255
124950 );
disp ( ) ;
disp ( S t a t e m e n t o f P r o f i t : ) ;
87
i
9960 );
30 disp ( P r o f i t a s p e r p r o c e s s
ii
13525 );
31 disp ( P r o f i t a s p e r p r o c e s s i i i
255 ) ;
32 disp ( T o t a l P r o f i t
29
disp ( P r o f i t a s p e r p r o c e s s
disp ( L e s s : Management E x p e n s e s
disp ( L e s s : S e l l i n g E x p e n s e s
27500 );
35 disp (
3760 );
33
34
23740 );
17500 );
10000
Net L o s s
Scilab code Exa 8.13 Labour cost and value of work in progress
1 // Exa13
2 clc ;
3 clear ;
4 close ;
5 disp ( U n i t O p e r a t i o n c o s t ) ;
6 disp (
% of r e j e c t s
labour cost per
100 ) ;
disp (
t o t h e o /p
Ratio /100 f o r
on o /p o f
each );
8 disp (
o f each
cost of f i n a l
Labour c o s t
operation
7/2
%
% );
9 disp ( O p e r a t i o n I n p u t R e j e c t s Output
operation %
Output ) ;
10 disp (
1
6000
1500
4500
33.33
200
10800
180
240 360 ) ;
7
88
11
disp (
12
disp (
13
disp (
14
disp (
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5625
375
150
150 210 ) ;
3
5250
140
280 364 ) ;
4
6500
130
130 156 ) ;
5
4800
120
120 120 ) ;
5250
7875
7.14
140
375
4875
13650
7.69
260
500
6000
7800
8.33
120
800
4000
4800
20
100
disp (
100
44925
800
920
1210 );
disp ( ) ;
disp ( On o u t p u t o f e a c h o p e r a t i o n =7/4 ) ;
disp ( On f i n a l o u t p u t o f e a c h o p e r a t i o n =( 8 6) / 1 0 0 ) ;
disp ( ( a . ) Column 6 i n d i c a t e s t h e numbers o f u n i t s
t o be put i n hand i n e a c h o p e r a t i o n s o t h a t a t
t h e end o f t h e f i n a l o p e r a t i o n , 1 0 0 good u n i t s a r e
o b t a i n e d . Thus i n t h i s c a s e , 200 u n i t s would be
t h e i n p u t t o o b t a i n 100 u n i t s o f good o u t p u t a t
t h e end o f t h e 5 t h o p e r a t i o n . ) ;
disp ( round (100+100*20/100) , Output 5 = ) ;
disp ( round (120+120*8.33/100) , Output 4 = ) ;
disp ( round (130+130*7.69/100) , Output 3 = ) ;
disp ( round (140+140*7.14/100) , Output 2 = ) ;
disp ( round (150+150*33.33/100) , Output 1 = ) ;
disp (1210 -800 , ( b . ) The l a b o u r c o s t o f w a s t e p e r 100
u n i t s = ) ;
disp ( ( c . ) The work i n p r o g r e s s can be computed a s
f o l l o w s : work i n p r o g r e s s a t t h e end o f ) ;
disp ( O p e r a t i o n No . 1 = u n i t s i n p r o g r e s s ( 2 4 0 ) / 1 0 0
);
disp ( O p e r a t i o n No . 2 = u n i t s i n p r o g r e s s
(240+150+2407.14/100) /100 );
89
29
30
31
32
33
34
35
36
37
38
39
disp ( O p e r a t i o n No . 3 = u n i t s i n p r o g r e s s
( 4 0 7 . 1 4 + 2 8 0 + 4 0 7 . 1 4 7 . 6 9 / 1 0 0 ) /100 );
disp ( O p e r a t i o n No . 4 = u n i t s i n p r o g r e s s
( 7 1 8 . 4 6 + 1 3 0 + 7 1 8 . 4 6 8 . 3 3 / 1 0 0 ) /100 );
disp ( O p e r a t i o n No . 5 = u n i t s i n p r o g r e s s
(908.34+60+908.3420/100) /100 );
disp ( V a l u a t i o n o f work i n p r o g r e s s ) ;
disp ( S t a g e ( a t t h e end o f )
c o m p o ne n t s
p e r 100 u n i t s
Total Value );
disp ( O P e r a t i o n
Rs
Rs ) ;
disp ( 1 .
1000
240
2400 );
disp ( 2 .
500
407.14
2 0 3 5 . 7 0 );
disp ( 3 .
750
718.46
5 3 8 8 . 4 5 );
disp ( 4 .
1000
908.34
9 0 8 3 . 4 0 );
disp ( 5 .
500
1210
6050 );
90
Value
Chapter 9
standard costing
// Exa1
clc ;
clear ;
close ;
// g i v e n d a t a :
SQ =4000 // i n s q . f t .
AQ =4300 // i n s q . f t .
SP =5 // i n r u p e e s p e r s q . f t .
AP =5.50 // i n r u p e e s p e r s q . f t .
// ( i ) MCV
MCV =( SQ * SP ) -( AQ * AP ) ; // i n r u p e e s
// ( i i ) MPV
MPV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MUV
MUV = SP *( SQ - AQ ) ; // i n r u p e e s
disp ( MCV , MCV= ) ;
disp ( MPV , MPV= ) ;
disp ( MUV , MUV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
;
91
21
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
// Exa2
clc ;
clear ;
close ;
// For f i r s t y e a r
P1 =500; // i n r u p e e s
n =3; // i n y e a r s
r =10; //% p e r annum
T =1 // i n y e a r
I1st =( P1 * r * T ) /100;
A1 = P1 + I1st ;
// For s e c o n d y e a r
P2 = A1 ;
I2nd =( P2 * r * T ) /100;
A2 = P2 + I2nd ;
// For t h i r d y e a r
P3 = A2 ;
I3rd =( P3 * r * T ) /100;
A3 = P3 + I3rd ;
// compound i n t e r e s t o r 3 y e a r s
CI = A3 - P1 ;
disp ( Compound i n t e r e s t i s : + string ( CI ) + Rupees .
)
92
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 SQ =100; // i n Kgs
7 actualoutput =240000; // i n Kgs
8 stdoutput =80; // i n Kgs
9 costofmaterial =346500; // i n Rupees
10 SQa =( SQ * actualoutput ) / stdoutput ; //SQa i s SQ f o r
a c t u a l output
SP =1.20; // i n Rupees p e r Kg
AQ =315000; // i n Kg
AP = costofmaterial / AQ ; // i n Rupees p e r Kg
// ( i ) MUV
MUV = SP *( SQa - AQ ) ; // i n r u p e e s
// ( i i ) MPV
MPV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MCV
MCV =( SQa * SP ) -( AQ * AP ) ; // i n r u p e e s
disp ( MUV , MUV= ) ;
disp ( MPV , MPV= ) ;
disp ( MCV , MCV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
25 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
11
12
13
14
15
16
17
18
19
20
21
22
23
24
93
7 value =9000; // r u p e e s f o r m a t e r i a l p u r c h a s e d
8 SQ =25;
9 stdoutput =1; // i n t o n n e s
10 actualoutput =80; // i n t o n n e s
11 //SQ f o r a c t u a l o u t p u t
12 SQa =( SQ * actualoutput ) / stdoutput ;
13 // M a t e r i a l consumed o r AQ
14 AQ =3000+100 -600; // o p e n i n g s t o c k =100; P u r c h a s e d = 3 0 0 0 ;
c l o s i n g s t o c k =600;
SP =2; // r u p e e s p e r u n i t
AP = value / quantity ; // r u p e e s p e r u n i t
// ( i ) MUV
MUV = SP *( SQa - AQ ) ; // i n r u p e e s
// ( i i ) MPV
MPV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MCV
MCV =( SQa * SP ) -( AQ * AP ) ; // i n r u p e e s
disp ( MUV , MUV= ) ;
disp ( MPV , MPV= ) ;
disp ( MCV , MCV= ) ;
disp ( Note : ) ;
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
28 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
15
16
17
18
19
20
21
22
23
24
25
26
27
94
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
SPa =2 // i n r u p e e s p e r Kgs
APa =2.20 // i n r u p e e s p e r Kgs
SQb =50 // i n kg
AQb =60 // i n Kg
SPb =5 // i n r u p e e s p e r Kg
APb =4.50 // i n r u p e e s p e r Kg
// ( i ) MUVa
MUVa = SPa *( SQa - AQa ) ; // i n r u p e e s
// ( i i ) MPVa
MPVa = AQa *( SPa - APa ) ; // i n r u p e e s
// ( i i i ) MCVa
MCVa =( SQa * SPa ) -( AQa * APa ) ; // i n r u p e e s
// ( i ) MUVb
MUVb = SPb *( SQb - AQb ) ; // i n r u p e e s
// ( i i ) MPVb
MPVb = AQb *( SPb - APb ) ; // i n r u p e e s
// ( i i i ) MCVb
MCVb =( SQb * SPb ) -( AQb * APb ) ; // i n r u p e e s
RSQa =( SQa *150) /( SQa + SQb ) ;
RSQb =( SQb *150) /( SQa + SQb ) ;
// ( i v ) MMVa
MMVa = SPa *( RSQa - AQa ) ;
// ( i v ) MMVb
MMVb = SPb *( RSQb - AQb ) ;
// ( v ) MSUVa
MSUVa = SPa *( SQa - RSQa ) ;
// ( v ) MSUVb
MSUVb = SPb *( SQb - RSQb ) ;
// m a t e r i a l A
disp ( V a r i a n c e s f o r m a t e r i a l A )
disp ( MUVa , MUV= ) ;
disp ( MPVa , MPV= ) ;
disp ( MCVa , MCV= ) ;
disp ( MMVa , MMV= ) ;
disp ( MSUVa , MSUV= )
// m a t e r i a l B
disp ( V a r i a n c e s f o r m a t e r i a l B )
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Scilab code Exa 9.6 Calculate material variances when mix ratio is same
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// Exa 6
clc ;
clear ;
close ;
// g i v e n d a t a :
// mix r a t i o i s t h e same
SQa =100 // i n Kgs
AQa =120 // i n Kgs
SPa =2 // i n r u p e e s p e r Kgs
APa =2.20 // i n r u p e e s p e r Kgs
SQb =50 // i n kg
AQb =60 // i n Kg
SPb =5 // i n r u p e e s p e r Kg
APb =4.50 // i n r u p e e s p e r Kg
// ( 1 )
Material cost variance
MCVa =( SQa * SPa ) -( AQa * APa ) ; // i n r u p e e s
MCVb =( SQb * SPb ) -( AQb * APb ) ; // i n r u p e e s
// ( 2 )
Material price variance
MPVb = AQb *( SPb - APb ) ; // i n r u p e e s
MPVa = AQa *( SPa - APa ) ; // i n r u p e e s
// ( 3 )
Material usage variance
MUVa = SPa *( SQa - AQa ) ; // i n r u p e e s
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// g i v e n d a t a :
// mix r a t i o i s n o t same
SQa =10 // i n Kgs
AQa =10 // i n Kgs
SPa =8 // i n r u p e e s p e r Kgs
APa =7 // i n r u p e e s p e r Kgs
SQb =8 // i n kg
AQb =9 // i n Kg
SPb =6 // i n r u p e e s p e r Kg
APb =7 // i n r u p e e s p e r Kg
SQc =4 // i n kg
AQc =5 // i n Kg
SPc =12 // i n r u p e e s p e r Kg
APc =11 // i n r u p e e s p e r Kg
// ( 1 )
Material cost variance
MCVa =( SQa * SPa ) -( AQa * APa ) ; // i n r u p e e s
MCVb =( SQb * SPb ) -( AQb * APb ) ; // i n r u p e e s
MCVc =( SQc * SPc ) -( AQc * APc ) ; // i n r u p e e s
disp ( MCVa , MCVa= ) ;
disp ( MCVb , MCVb= ) ;
disp ( MCVc , MCVc= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
28 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
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SPa =8 // i n r u p e e s p e r Kgs
APa =7 // i n r u p e e s p e r Kgs
SQb =8 // i n kg
AQb =9 // i n Kg
SPb =6 // i n r u p e e s p e r Kg
APb =7 // i n r u p e e s p e r Kg
SQc =4 // i n kg
AQc =5 // i n Kg
SPc =12 // i n r u p e e s p e r Kg
APc =11 // i n r u p e e s p e r Kg
// ( 2 )
Material price variance
MPVb = AQb *( SPb - APb ) ; // i n r u p e e s
MPVa = AQa *( SPa - APa ) ; // i n r u p e e s
MPVc = AQc *( SPc - APc ) ; // i n r u p e e s
disp ( MPVa , MPVa= ) ;
disp ( MPVb , MPVb= ) ;
disp ( MPVc , MPVc= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
28 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
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// Exa 7 ( i v )
clc ;
clear ;
close ;
// g i v e n d a t a :
// mix r a t i o i s n o t same
SQa =10 // i n Kgs
AQa =10 // i n Kgs
SPa =8 // i n r u p e e s p e r Kgs
APa =7 // i n r u p e e s p e r Kgs
100
SQb =8 // i n kg
AQb =9 // i n Kg
SPb =6 // i n r u p e e s p e r Kg
APb =7 // i n r u p e e s p e r Kg
SQc =4 // i n kg
AQc =5 // i n Kg
SPc =12 // i n r u p e e s p e r Kg
APc =11 // i n r u p e e s p e r Kg
// ( 4 )
M a t e r i a l mix v a r i a n c e
RSQa =( SQa *24) /(22) ;
RSQb =( SQb *24) /(22) ;
RSQc =( SQc *24) /(22)
MMVa = SPa *( RSQa - AQa ) ;
MMVb = SPb *( RSQb - AQb ) ;
MMVc = SPc *( RSQc - AQc ) ;
disp ( MMVa , MMV= ) ;
disp ( MMVb , MMV= ) ;
disp ( MMVc , MMV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
31 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
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// Exa 7 ( v )
clc ;
clear ;
close ;
// g i v e n d a t a :
// mix r a t i o i s n o t same
SQa =10 // i n Kgs
AQa =10 // i n Kgs
SPa =8 // i n r u p e e s p e r Kgs
101
APa =7 // i n r u p e e s p e r Kgs
SQb =8 // i n kg
AQb =9 // i n Kg
SPb =6 // i n r u p e e s p e r Kg
APb =7 // i n r u p e e s p e r Kg
SQc =4 // i n kg
AQc =5 // i n Kg
SPc =12 // i n r u p e e s p e r Kg
APc =11 // i n r u p e e s p e r Kg
// ( 5 )
M a t e r i a l sub u s a g e v a r i a n c e
MSUVa = SPa *( SQa - RSQa ) ;
MSUVb = SPb *( SQb - RSQb ) ;
MSUVc = SPc *( SQc - RSQc ) ;
disp ( MSUVa , MSUV= ) ;
disp ( MSUVb , MSUV= ) ;
disp ( MSUVc , MSUV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
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);
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// Exa 8
clc ;
clear ;
close ;
// g i v e n d a t a :
// mix r a t i o i s n o t same
SQx =54 // i n Kgs
AQx =40 // i n Kgs
SPx =6 // i n r u p e e s p e r Kgs
APx =6 // i n r u p e e s p e r Kgs
SQy =44 // i n kg
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AQy =50 // i n Kg
SPy =5 // i n r u p e e s p e r Kg
APy =5 // i n r u p e e s p e r Kg
SQz =20 // i n kg
AQz =24 // i n Kg
SPz =7 // i n r u p e e s p e r Kg
APz =7 // i n r u p e e s p e r Kg
// ( 1 )
Material cost variance
MCVx =( SQx * SPx ) -( AQx * APx ) ; // i n r u p e e s
MCVy =( SQy * SPy ) -( AQy * APy ) ; // i n r u p e e s
MCVz =( SQz * SPz ) -( AQz * APz ) ; // i n r u p e e s
// ( 2 )
Material price variance
MPVy = AQy *( SPy - APy ) ; // i n r u p e e s
MPVx = AQx *( SPx - APx ) ; // i n r u p e e s
MPVz = AQz *( SPz - APz ) ; // i n r u p e e s
// ( 3 )
Material usage variance
MUVx = SPx *( SQx - AQx ) ; // i n r u p e e s
MUVy = SPy *( SQy - AQy ) ; // i n r u p e e s
MUVz = SPz *( SQz - AQz ) ; // i n r u p e e s
// ( 4 )
M a t e r i a l mix v a r i a n c e
RSQx =( SQx *114) /(118) ;
RSQy =( SQy *114) /(118) ;
RSQz =( SQz *114) /(118)
MMVx = SPx *( RSQx - AQx ) ;
MMVy = SPy *( RSQy - AQy ) ;
MMVz = SPz *( RSQz - AQz ) ;
// ( 5 )
M a t e r i a l sub u s a g e v a r i a n c e
MSUVx = SPx *( SQx - RSQx ) ;
MSUVy = SPy *( SQy - RSQy ) ;
MSUVz = SPz *( SQz - RSQz ) ;
// m a t e r i a l C o s t v a r i a n c e
disp ( m a t e r i a l C o s t v a r i a n c e s : )
disp ( MCVx , MCVx= ) ;
disp ( MCVy , MCVy= ) ;
disp ( MCVz , MCVz= ) ;
// m a t e r i a l Usage v a r i a n c e
disp ( m a t e r i a l Usage v a r i a n c e s : )
disp ( MUVx , MUVx= ) ;
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APx =5 // i n r u p e e s p e r Kgs
SQy1 =80 // i n kg
AQy =88 // i n Kg
SPy =10 // i n r u p e e s p e r Kg
APy =10 // i n r u p e e s p e r Kg
Loss =30; // i n %
// c a l c u l a t i o n o f SQ f o r a c t u a l o u t p u t
StandardYield =( SQx1 + SQy1 ) -(( SQx1 + SQy1 ) * Loss ) /100; //
i n kg
ActualYield =150; // i n kg
SQx =( SQx1 * ActualYield ) / StandardYield ; // i n kg
SQy =( SQy1 * ActualYield ) / StandardYield ; // i n kg
// ( 1 )
Material cost variance
MCVx =( SQx * SPx ) -( AQx * APx ) ; // i n r u p e e s
MCVy =( SQy * SPy ) -( AQy * APy ) ; // i n r u p e e s
// ( 2 )
Material price variance
MPVy = AQy *( SPy - APy ) ; // i n r u p e e s
MPVx = AQx *( SPx - APx ) ; // i n r u p e e s
// ( 3 )
Material usage variance
MUVx = SPx *( SQx - AQx ) ; // i n r u p e e s
MUVy = SPy *( SQy - AQy ) ; // i n r u p e e s
// ( 4 )
M a t e r i a l mix v a r i a n c e
RSQx =( SQx *200) /(200) ;
RSQy =( SQy *200) /(200) ;
MMVx = SPx *( SQx1 - AQx ) ;
MMVy = SPy *( SQy1 - AQy ) ;
// ( 5 )
Material Yield variance
TotalSC = SQx1 * SPx + SQy1 * SPy ; // i n Rs
TotalSQ = SQx1 + SQy1 -(( SQx1 + SQy1 ) * Loss ) /100; // i n Kg
SCperunit = TotalSC / TotalSQ ; // i n Rs
RSY =( StandardYield *(200) ) /(200) ;
MYV = SCperunit *( ActualYield - RSY ) ;
// m a t e r i a l C o s t v a r i a n c e
disp ( m a t e r i a l C o s t v a r i a n c e s : )
disp ( MCVx , MCVx= ) ;
disp ( MCVy , MCVy= ) ;
disp ( MCVx + MCVy , T o t a l MCV= ) ;
// m a t e r i a l P r i c e v a r i a n c e
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disp ( m a t e r i a l P r i c e v a r i a n c e s : )
disp ( MPVx , MPVx= ) ;
disp ( MPVy , MPVy= ) ;
disp ( MPVx + MPVy , T o t a l MPV= ) ;
disp ( As s t a n d a r d p r i c e s and a t u a l p r i c e s a r e same ,
h e n c e t h e r e i s no m a t e r i a l P r i c e v a r i a n c e )
// m a t e r i a l Usage v a r i a n c e
disp ( m a t e r i a l Usage v a r i a n c e s : )
disp ( MUVx , MUVx= ) ;
disp ( MUVy , MUVy= ) ;
disp ( MUVx + MUVy , T o t a l MUV= ) ;
// m a t e r i a l Mix v a r i a n c e
disp ( m a t e r i a l mix v a r i a n c e s : )
disp ( MMVx , MMVx= ) ;
disp ( MMVy , MMVy= ) ;
disp ( MMVx + MMVy , T o t a l MMV= ) ;
// m a t e r i a l Y i e l d v a r i a n c e
disp ( m a t e r i a l Y i e l d v a r i a n c e s : )
disp ( MYV , MYV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
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TotalSQ = SQa1 + SQb1 + SQc1 -(( SQa1 + SQb1 + SQc1 ) * Loss ) /100;
// i n Kg
SCperunit = TotalSC / StandardYield ; // i n Rs
RSY =( StandardYield *(900) ) /(750) ;
MYV = SCperunit *( ActualYield - RSY ) ;
// m a t e r i a l C o s t v a r i a n c e
disp ( m a t e r i a l C o s t v a r i a n c e s : )
disp ( MCVa , MCVa= ) ;
disp ( MCVb , MCVb= ) ;
disp ( MCVc , MCVc= ) ;
disp ( MCVa + MCVb + MCVc , T o t a l MCV= ) ;
// m a t e r i a l P r i c e v a r i a n c e
disp ( m a t e r i a l P r i c e v a r i a n c e s : )
disp ( MPVa , MPVa= ) ;
disp ( MPVb , MPVb= ) ;
disp ( MPVc , MPVc= ) ;
disp ( MPVa + MPVb + MPVc , T o t a l MPV= ) ;
// m a t e r i a l Usage v a r i a n c e
disp ( m a t e r i a l Usage v a r i a n c e s : )
disp ( MUVa , MUVa= ) ;
disp ( MUVb , MUVb= ) ;
disp ( MUVc , MUVc= ) ;
disp ( MUVa + MUVb + MUVc , T o t a l MUV= ) ;
// m a t e r i a l Mix v a r i a n c e
disp ( m a t e r i a l mix v a r i a n c e s : )
disp ( MMVa , MMVa= ) ;
disp ( MMVb , MMVb= ) ;
disp ( MMVc , MMVc= ) ;
disp ( MMVa + MMVb + MMVc , T o t a l MMV= ) ;
// m a t e r i a l Y i e l d v a r i a n c e
disp ( m a t e r i a l Y i e l d v a r i a n c e s : )
disp ( MYV , MYV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
108
// Exa 11
clc ;
clear ;
close ;
// g i v e n d a t a :
SQa1 =240 // i n Kgs
AQa =280 // i n Kgs
SPa =4 // i n r u p e e s p e r Kgs
APa =3.8 // i n r u p e e s p e r Kgs
SQb1 =160 // i n kg
AQb =120 // i n Kg
SPb =3 // i n r u p e e s p e r Kg
APb =3.6 // i n r u p e e s p e r Kg
Loss =10; // i n %
// c a l c u l a t i o n o f SQ f o r a c t u a l o u t p u t
StandardYield =( SQa1 + SQb1 ) -(( SQa1 + SQb1 ) * Loss ) /100; //
i n kg
ActualYield =364; // i n kg
SQa =( SQa1 * ActualYield ) / StandardYield ; // i n kg
SQb =( SQb1 * ActualYield ) / StandardYield ; // i n kg
// ( 1 )
Material cost variance
MCVa =( SQa * SPa ) -( AQa * APa ) ; // i n r u p e e s
MCVb =( SQb * SPb ) -( AQb * APb ) ; // i n r u p e e s
// ( 2 )
Material price variance
MPVb = AQb *( SPb - APb ) ; // i n r u p e e s
MPVa = AQa *( SPa - APa ) ; // i n r u p e e s
// ( 4 )
M a t e r i a l mix v a r i a n c e
RSQa =( SQa1 *400) /(400) ;
RSQb =( SQb1 *400) /(400) ;
MMVa = SPa *( RSQa - AQa ) ;
MMVb = SPb *( RSQb - AQb ) ;
// ( 5 )
Material Yield variance
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)
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// g i v e n d a t a :
ST =10; // i n h o u r s
AT =8; // i n h o u r s
SR =9; // i n Rs / Hour
AR =10; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
LEV = SR *( ST - AT ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
disp ( LCV , Labour C o s t v a r i a n c e : )
disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
disp ( LRV , Labour Rate v a r i a n c e : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
20 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
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// Exa 13
clc ;
clear ;
close ;
// g i v e n d a t a :
ST =4300; // i n h o u r s
AT =4000; // i n h o u r s
SR =3; // i n Rs / Hour
GWP =16400; // i n RS
AR = GWP / AT ; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
LEV = SR *( ST - AT ) ; // i n Rs
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15 // Labour Rate v a r i a n c e
16 LRV = AT *( SR - AR ) ; // i n Rs
17 disp ( LCV , Labour C o s t v a r i a n c e : )
18 disp ( LRV , Labour Rate v a r i a n c e : )
19 disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
20 disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
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;
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
// Exa 14
clc ;
clear ;
close ;
// g i v e n d a t a :
ST =3200; // i n h o u r s
AT =3000; // i n h o u r s
SR =1.5; // i n Rs / Hour
IT =100; // i n Rs / Hour
AWP =6000; // i n RS
AR = AWP / AT ; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
AT1 = AT - IT ; // i d l e t i m e i s d e d u c t e d t o c a l c u l a t e r e a l
efficiency
LEV = SR *( ST - AT1 ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
// Labour I d l e Time v a r i a n c e
ITV = IT * SR ; // i n Rs
disp ( LCV , Labour C o s t v a r i a n c e : )
disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
112
23
24
25
// Exa 15
clc ;
clear ;
close ;
// g i v e n d a t a :
P =1000; // i n u n i t s
T =10; // h o u r s / u n i t
ST = P * T ; // i n h o u r s
AT =10800; // i n h o u r s
SR =5; // i n Rs / Hour
AR =5.20; // i n Rs / Hour
IT =400; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
AT1 = AT - IT ; // i d l e t i m e i s d e d u c t e d t o c a l c u l a t e r e a l
efficiency
LEV = SR *( ST - AT1 ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
// Labour I d l e Time v a r i a n c e
ITV = IT * SR ; // i n Rs
disp ( LCV , Labour C o s t v a r i a n c e : )
disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
disp ( LRV , Labour Rate v a r i a n c e : )
disp ( ITV , Labour I d l e Time v a r i a n c e : )
113
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
27 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
26
// Exa 16
clc ;
clear ;
close ;
// g i v e n d a t a :
STa =20; // i n h o u r s
STb =25; // i n h o u r s
ATa =30; // i n h o u r s
ATb =15; // i n h o u r s
SRa =3; // i n Rs / Hour
SRb =4; // i n Rs / Hour
ARa =3; // i n Rs / Hour
ARb =4.5; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCVa =( STa * SRa ) -( ATa * ARa )
LCVb =( STb * SRb ) -( ATb * ARb )
// Labour E f f i c i e n c y v a r i a n c e
LEVa = SRa *( STa - ATa ) ; // i n Rs
LEVb = SRb *( STb - ATb ) ; // i n Rs
// Labour Rate v a r i a n c e
LRVa = ATa *( SRa - ARa ) ; // i n Rs
LRVb = ATb *( SRb - ARb ) ; // i n Rs
// Labour Mix v a r i a n c e
TAMT = ATa + ATb ; // t o t a l o f a c t u a l mix t i m e
TSMT = STa + STb ; // t o t a l o f s t a n d a r d mix t i m e
RSTa =( STa * TAMT ) / TSMT
RSTb =( STb * TAMT ) / TSMT
LMVa = SRa *( RSTa - ATa ) ; // i n Rs
114
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46
// Exa 17
clc ;
clear ;
close ;
// g i v e n d a t a
STs =1600; // i n
STu =2400; // i n
ATs =2500; // i n
ATu =2500; // i n
SRs =0.50; // i n
SRu =0.60; // i n
:
hours
hours
hours
hours
Rs / Hour
Rs / Hour
115
116
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53
// Exa 18
clc ;
clear ;
close ;
// g i v e n d a t a :
// l e t s= s k i l l e d ; s s=s e m i s k i l l e d ; u= u n s k i l l e d
STs =3000; // i n w e e k s
STss =1200; // i n w e e k s
STu =1800; // i n w e e k s
ATs =2560; // i n w e e k s
ATss =1600; // i n w e e k s
ATu =2240; // i n w e e k s
SRs =60; // i n Rs / week
SRss =36; // i n Rs / week
SRu =24; // i n Rs / week
ARs =65; // i n Rs / week
ARss =40; // i n Rs / week
ARu =20; // i n Rs / week
// Labour C o s t v a r i a n c e
LCVs =( STs * SRs ) -( ATs * ARs )
LCVss =( STss * SRss ) -( ATss * ARss )
LCVu =( STu * SRu ) -( ATu * ARu )
// Labour E f f i c i e n c y v a r i a n c e
LEVs = SRs *( STs - ATs ) ; // i n Rs
LEVss = SRss *( STss - ATss ) ; // i n Rs
117
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34
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41
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// Exa 19
clc ;
clear ;
close ;
// g i v e n d a t a :
ST =60; // i n h o u r s
AT =40; // i n h o u r s
SR =120; // i n Rs / Hour
AR =200; // i n Rs / Hour
SCperunit =6; // i n Rs
StdTime =50; // i n h o u r s
StdYield =1000; // i n u n i t s
AY =1200; // i n u n i t s
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
LEV = SR *( ST - AT ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
// Labour Y i e l d v a r i a n c e
SY =( StdYield * AT ) / StdTime ;
119
22 LYV = SCperunit *( AY - SY ) ;
23 disp ( LCV , Labour C o s t v a r i a n c e : )
24 disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
25 disp ( LRV , Labour Rate v a r i a n c e : )
26 disp ( LYV , Labour Y i e l d v a r i a n c e : )
27 disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
28
;
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
);
// Exa 21
clc ;
clear ;
close ;
// g i v e n d a t a :
// l e t m=men ; w=women ; b=b o y s
STm =960; // i n h o u r s
STw =480; // i n h o u r s
STb =320; // i n h o u r s
ATm =1600; // i n h o u r s
ATw =400; // i n h o u r s
ATb =200; // i n h o u r s
SRm =0.80; // i n Rs / h o u r
SRw =0.60; // i n Rs / h o u r
SRb =0.40; // i n Rs / h o u r
ARm =0.70; // i n Rs / h o u r
ARw =0.65; // i n Rs / h o u r
ARb =0.30; // i n Rs / h o u r
IT =220; // i n h o u r s
// Labour C o s t v a r i a n c e
LCVm =( STm * SRm ) -( ATm * ARm )
LCVw =( STw * SRw ) -( ATw * ARw )
LCVb =( STb * SRb ) -( ATb * ARb )
120
24 // Labour E f f i c i e n c y v a r i a n c e
25 LEVm = SRm *( STm - ATm ) ; // i n Rs
26 LEVw = SRw *( STw - ATw ) ; // i n Rs
27 LEVb = SRb *( STb - ATb ) ; // i n Rs
28 // Labour Rate v a r i a n c e
29 LRVm = ATm *( SRm - ARm ) ; // i n Rs
30 LRVw = ATw *( SRw - ARw ) ; // i n Rs
31 LRVb = ATb *( SRb - ARb ) ; // i n Rs
32 // Labour Mix v a r i a n c e
33 TAMT = ATm + ATb + ATw - IT ; // t o t a l o f a c t u a l mix t i m e
34 TSMT = STm + STb + STw ; // t o t a l o f s t a n d a r d mix t i m e
35 RSTm =( STm * TAMT ) / TSMT
36 RSTw =( STw * TAMT ) / TSMT
37 RSTb =( STb * TAMT ) / TSMT
38 LMVm = SRm *( RSTm - ATm ) ; // i n Rs
39 LMVw = SRw *( RSTw - ATw ) ; // i n Rs
40 LMVb = SRb *( RSTb - ATb ) ; // i n Rs
41 // Labour I d l e t i m e v a r i a n c e
42 ITV = IT *(( STm * SRm + STw * SRw + STb * SRb ) /( STm + STw + STb ) ) ; //
43
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60
i n Rs
disp ( Labour C o s t v a r i a n c e : )
disp ( LCVm , Labour C o s t v a r i a n c e LCVm: )
disp ( LCVw , Labour C o s t v a r i a n c e LCVw : )
disp ( LCVb , Labour C o s t v a r i a n c e LCVb : )
disp ( LCVm + LCVw + LCVb , Labour C o s t v a r i a n c e : )
disp ( Labour Rate v a r i a n c e : )
disp ( LRVm , Labour Rate v a r i a n c e LRVm: )
disp ( LRVw , Labour Rate v a r i a n c e LRVw : )
disp ( LRVb , Labour Rate v a r i a n c e LRVb : )
disp ( LRVm + LRVw + LRVb , Labour Rate v a r i a n c e : )
disp ( Labour E f f i c i e n c y v a r i a n c e : )
disp ( LEVm , Labour E f f i c i e n c y v a r i a n c e LEVm : )
disp ( LEVw , Labour E f f i c i e n c y v a r i a n c e LEVw : )
disp ( LEVb , Labour E f f i c i e n c y v a r i a n c e LEVb : )
disp ( LEVm + LEVw + LEVb , Labour E f f i c i e n c y v a r i a n c e : )
disp ( Labour Mix v a r i a n c e : )
disp ( LMVm , Labour Mix v a r i a n c e LMVm: )
disp ( LMVw , Labour Mix v a r i a n c e LMVw: )
121
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65
// Exa22
clc ;
clear ;
close ;
// g i v e n d a t a :
SQ =58000 // i n s q . f t .
AQ =60000 // i n s q . f t .
SP =7 // i n r u p e e s p e r s q . f t .
AP =6.75 // i n r u p e e s p e r s q . f t .
ST =174000; // i n h o u r s
AT =185200; // i n h o u r s
SR =3.75; // i n Rs / Hour
AR =3.5; // i n Rs / Hour
// ( i ) MCV
MCV =( SQ * SP ) -( AQ * AP ) ; // i n r u p e e s
// ( i i ) MPV
MRV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MUV
MUV = SP *( SQ - AQ ) ; // i n r u p e e s
disp ( MCV , MCV= ) ;
disp ( MRV , MRV= ) ;
disp ( MUV , MUV= ) ;
disp ( Note : )
122
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26
27
28
29
30
31
32
33
34
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
)
;
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
LEV = SR *( ST - AT ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
disp ( LCV , Labour C o s t v a r i a n c e : )
disp ( LRV , Labour Rate v a r i a n c e : )
disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
123