MCQ for CA Final SCMPE - Chapter 4 Decision Making
Sample Multiple Choice Questions (MCQ's) for CA Final - Paper 5 - Strategic Cost Management and Performance Evaluation - Chapter 4: Decision Making - For Practice relevant for May/Nov 23 Examinations
Q:1 Catalyst Ltd. Makes a single product with the following details:
Description |
Current Situation |
Proposed Change |
Selling Price (₹ /unit) |
10 |
|
Direct Costs(₹/unit) |
5 |
|
Present number of setups per production period, (before each production run, setup is done) |
42 |
_ |
Cost per set up (₹) |
450 |
Decrease by ₹ 90 |
Production units per run |
960 |
1,008 |
Engineering hours for production period |
500 |
422 |
Cost per engineering hour (₹) |
10 |
The company has begun Activity Based Costing of fixed costs and has presently identified two cost drivers viz. production runs and engineering hours. Of the total fixed costs presently at ₹ 96,000, after the above, ₹ 72,100 remains to be analyzed. There are changes as proposed above for the next production period for the same volume of output.
Required
(i)COMPUTE units and production runs Catalyst Ltd. should produce in the changed scenario for break-even
- 18,124 units
- 18,144 units
- 18,140 units
- 18,240 units
Answer: 2
Q:2 Catalyst Ltd. Makes a single product with the following details:
Description |
Current Situation |
Proposed Change |
Selling Price (₹ /unit) |
10 |
|
Direct Costs(₹/unit) |
5 |
|
Present number of setups per production period, (before each production run, setup is done) |
42 |
_ |
Cost per set up (₹) |
450 |
Decrease by ₹ 90 |
Production units per run |
960 |
1,008 |
Engineering hours for production period |
500 |
422 |
Cost per engineering hour (₹) |
10 |
The company has begun Activity Based Costing of fixed costs and has presently identified two cost drivers viz. production runs and engineering hours. Of the total fixed costs presently at ₹ 96,000, after the above, ₹ 72,100 remains to be analyzed. There are changes as proposed above for the next production period for the same volume of output.
Required
Calculate Break Even Point (No of Production Runs)
- 10 Runs
- 17 Runs
- 18 Runs
- 15 Runs
Answer: 3
Q:3 A company manufactures two products. Each product passes through two departments A and B before it becomes a finished product. The data for the year are as under:
Product X |
Product Y |
|
Maximum Sales Potential (in units) |
7,400 |
10,000 |
Product unit data: |
||
Selling Price p.u. |
₹ 90 |
₹ 80 |
Machine hrs. p.u. |
||
Department A hrs@ ₹ 40/ hr |
0.50 |
0.30 |
Department B hrs. @ ₹ 60/ hr. |
0.40 |
0.45 |
Maximum Capacity of Department A is 3,400 hrs. and Department Bis 3,640 hrs.
Maximum Quantity of Direct Materials available is 17000 kgs. Each product requires 2 kg. Of Direct Materials. The Purchase price of Direct materials is ₹ 5/kg.
Required Contribution p.u.
- Product X: 33 Product Y: 30
- Product X: 36 Product Y: 31
- Product X: 31 Product Y: 38
- Product X: 31 Product Y: 31
Answer: 2
Q:4 A company manufactures two products. Each product passes through two departments A and B before it becomes a finished product. The data for the year are as under:
Product X |
Product Y |
|
Maximum Sales Potential (in units) |
7,400 |
10,000 |
Product unit data: |
||
Selling Price p.u. |
₹ 90 |
₹ 80 |
Machine hrs. p.u. |
||
Department A hrs@ ₹ 40/ hr |
0.50 |
0.30 |
Department B hrs. @ ₹ 60/ hr. |
0.40 |
0.45 |
Maximum Capacity of Department A is 3,400 hrs. and Department Bis 3,640 hrs.
Maximum Quantity of Direct Materials available is 17000 kgs. Each product requires 2 kg. Of Direct Materials. The Purchase price of Direct materials is ₹ 5/kg.
Find optimum product mix
- X 4,250 units and Y 4,250 units
- X 4,285 units and Y 4,280 units
- X 4,250 units and Y 4,280 units
- X 4,285 units and Y 4,250 units
Answer: 1
Q:5 BNZ Ltd. is engaged in the manufacture of plastic bottles of a standard size and produced by a joint process of machines.The factory has 5 machines and capable of producing 40 bottles per hour. The variable cost per bottle is `0.32 and the selling price is `0.80 each. The company has received an offer from another company for manufacture of 40,000 units of a plastic moulded toy. The price per toy is `30 and the variable, cost is `24 each. In case of the company takes up the job, it has to meet the expenses of making a special mould required for the manufacture of the toy. The cost of the mould is `1,00,000. The company's time study analysis shows that the machines can produce only 16 toys per hour. The company has a total capacity of 10,000 hours during the period in which the toy is required to be manufactured. The fixed costs excluding the cost of construction of the mould during the period will be `10 Lakh.
The company has an order for the supply of 3,00,000 bottles during the period.
Required
(i) Do you ADVISE the company to take up the order for manufacturing plastic moulded toys during the time when it has an order in its book for the supply of 3,00,000 bottles For this Calculate Contribution / Machine Hour
- Bottle 20.02 Toy 50.5
- Bottle 18.02 Toy 20
- Bottle 19.20 Toy 56
- Bottle 29.20 Toy 46
Answer: 3
Q:6 BNZ Ltd. is engaged in the manufacture of plastic bottles of a standard size and produced by a joint process of machines.The factory has 5 machines and capable of producing 40 bottles per hour. The variable cost per bottle is `0.32 and the selling price is `0.80 each. The company has received an offer from another company for manufacture of 40,000 units of a plastic moulded toy. The price per toy is `30 and the variable, cost is `24 each. In case of the company takes up the job, it has to meet the expenses of making a special mould required for the manufacture of the toy. The cost of the mould is `1,00,000. The company's time study analysis shows that the machines can produce only 16 toys per hour. The company has a total capacity of 10,000 hours during the period in which the toy is required to be manufactured. The fixed costs excluding the cost of construction of the mould during the period will be `10 Lakh.
The company has an order for the supply of 3,00,000 bottles during the period.
An associate company of BNZ Ltd. has idle capacity and is willing to take up the whole or part of the manufacturing of the plastic moulded toys on sub-contracting basis. The subcontract price inclusive of the cost of construction of mould is `28 per toy. DETERMINE the minimum expected excess machine hour capacity needed to justify producing any portion of the toy order by the company itself rather than subcontracting
- 1,560 hrs
- 1,563 hrs
- 1,536 hrs
- 1,553 hrs
Answer: 2
CA Final - Paper 5 - SCMPE - Chapter 5 
To get back to the Chapterwise MCQ List Page
Hope you can find this article helpful. If you did like the content then Share it with your friends who are preparing for CA Final Exams or who will be giving their CA Final Exams in the near future.