Appendix Solved Sca Solution/New Syllabus/… · Solved Scanner Appendix CMA (CWA) Inter Gr. II Paper 10 2 Chapter - 4 : Contract Costing 2013 - Dec [4] (b) Computation of Estimated

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CMA (CWA) Inter Gr. II(Solution of December - 2013)

Paper - 10 : Cost & Management Accountancy

Section - A : Cost & Management Accounting Methods & Techniques

Chapter - 2 : Integrated & Non-Integrated Accounting System2013 - Dec [6] (b)

(i) Impact on Costing Profit & Loss Account

Particulars Financial Books

Costbooks

Impact on cost books

Amount in `

Closing StockSundry IncomesDirect WagesFactory OverheadAdmin. ExpensesSelling Expenses

1,50,242632

46,26641,65219,69044,352

1,56,394-

49,73439,42820,79034,650

6,152632

3,4682,2241,1009,702

Results in more profitLess profit in cost accountsOver-absorbedUnder absorbedOver-absorbedUnder-absorbed

(ii) Reconciliation Statement for the year ended 31st March 2013

Particulars ` `

Profit as per Financial P&L AccountAdd: Difference in closing stock

Factory overheads under - absorbed Selling expenses under - absorbed

Less: Over - absorbed direct wages Over - absorbed admin. Expenses Sundry income not taken in cost account

Profit as per cost accounts

6,1522,2249,7023,4681,100 632

33,248

18,078

(5,200)46,126

Solved ScannerSolved ScannerSolved ScannerSolved Scanner Appendix CMA (CWA) Inter Gr. II Paper 10 2

Chapter - 4 : Contract Costing2013 - Dec [4] (b) Computation of Estimated Profit

Amount `̀̀̀ Amount `̀̀̀

Contract PriceLess : Cost of work to dateEstimated Further expenditure to complete contractEstimated total costHence, Estimated Profit

4,50,00025,000

6,12,000

4,75,0001,37,000

Computation of profit to be transferred to Profit & Loss Account under different Methods:

(i) Estimated Profit × Work certified /contract price =

= ` 1,23,300(ii) Estd. Profit × [Work certified / contract price] × [cash received / work certified]

= 1,37,000 × [5,50,800 / 6,12,000] × [4,40,640 /5,50, 800] = ` 98,640

(iii) Estd. Profit × Cost of work to date /Estd. Total cost =

= ` 1,29,789.47(iv) Estd. Profit × [cost of work to date/Estd. Total cost] × [cash received/ work

certified] = 1,37,000 × [4,50,000/4,75,000] × [4,40,640 × 5,50,800] =` 1,03,831.58

Chapter - 8 : Marginal Costing2013 - Dec [1] (b), (d)

(b) PV Ratio = =

= = 20%

Fixed cost = Sales × PV Ratio - profit= 2,00,000 × 0.2 - 20,000 = ` 20,000

Sales required to earn a profit of ` 50,000 =

= = ` 3,50,000

(d) Variable Cost per unit = ` 160 × 75%= ` 120Fixed Cost per unit = (160 - 120) = ` 40Total fixed Cost = 10,000 × 40 = ` 4,00,000Production increases by 25% of 10,000 = 12,500Variable cost 12,500 × 120 = 15,00,000Total Cost = VC + FC =15,00,000 +4,00,000 = ` 19,00,000

Cost of production per unit = = ` 152


2013 - Dec [2] (a) Results of the first quarter: Sales 10,000 units

Particulars Per units (`̀̀̀) Amount (`̀̀̀)

Variable Cost (VC)Fixed Cost (FC)Total CostLossSales (S)Contribution (S - VC)

83

111

102

80,00030,000

1,10,00010,000

1,00,00020,000

Comparative Statement of 3 Proposals

Particulars Proposal of

Finance ManagerAmount (`)

Sales ManagerAmount (`)

Prod. ManagerAmount (`)

Selling Price per Unit 10.00 10.00 9.70

Variable Cost per Unit 8.50 8.00 8.00

Contribution Per Unit 1.50 2.00 1.70

Fixed Cost 30,000 35,000 30,000

Profit required Nil 5,000 4,000

Particulars Proposal of

FinanceManager

Amount (`̀̀̀)

SalesManager

Amount (`̀̀̀)

Prod. ManagerAmount (`̀̀̀)

BEP (Units) = FixedCost/Contribution per unit (A)

30,000/1.50=20,000

- -

Sales (Units) = Fixed Cost+Profit/Contribution per unit (A) -

35,000 +5,000/

2.00 = 20,000

30,000 +4,000/1.70=

20,000

Sales in First Quarter (B) 10,000 10,000 10,000

Fixed Cost 10,000 10,000 10,000

Additional Sales Volume requiredin SECOND Quarter as Comparedto first Quarter (A-B)

Nil 5,000 4,000

Chapter - 9 : Throughput Accounting2013 - Dec [1] (a)

Return per hour = =

= = ` 180

Hence, return per hours for product B - 1 is ` 180.


Chapter - 10: Activity Based Costing2013 - Dec [4] (a) AKASH INDUSTRIES LTD

(i) Computation of Product Costs Using Traditional Costing System (based on assumption that all overheads are recovered on the basis of DirectLabour hours)

(A) Products X Y Z

`̀̀̀ `̀̀̀ `̀̀̀

Direct Labour 8 12 6

Direct Material 25 20 11

Overhead 4/3 × 21= 28 2 × 21= 42 1 × 21= 21

Total 61 74 38

Direct Labour Hour rate = Overhead cost/Direct labour hours= 18,48,000/88,000 = ` 21 per hour

(B) The overheads of the receiving department are recovered by a materialhandling overhead rate the remaining overheads are recovered by using amachine hour rate:

Products X Y Z

`̀̀̀ `̀̀̀ `̀̀̀



Material handlingoverhead

25 × 35.14%= 8.78 20 × 35.14%= 7.03 11 × 35.14%= 3.87

Other overhead 4/3×18.59= 24.79 1 × 18.59= 18.59 1 × 18.59 = 18.59

Total 66.57 57.62 58.05

Material Handing Rate = 4,35,000/12,38,000 = 35.14%, andMachine hour rate = 14,13,000/76,000 = ` 18.59

(ii) Computation of Product Costs Using Activity Based Costing (ABC)System:

Products X Y Z

`̀̀̀ `̀̀̀ `̀̀̀



Machineoverheads 10 × 4/3= 13.33 10 × 1=10 10 × 2= 20

Set-up Costs 100 × 3/30,000= 0.10 1,000 × 7/20,000= 0.35 1,000 × 20/8,000= 2.50

Receiving 1,611 × 15/30,000= 0.81 1,611 × 35/20,000= 2.82 1,611× 220/8,000= 44.30

Packing 7,812×9/30,000= 2.34 7,812 × 3/20,000=1.17 7,812×20/8,000= 19.53

Engineering 7,460×15/30,000= 3.73 7,460 × 10/20,000= 3.73 7,460 × 25/8,000= 23.31

Total ProductCost

53.31 50.07 126.64


Machine overhead rate per hour = 7,60,000 / 76,000 = ` 10 Cost per set-up = 30,000 / 30 = ` 1,000 Cost per receiving order = 4,35,000 / 270 = `1,611 Cost per packing order = 2,50,000 / 32 = ` 7,812 Engineering. : Cost per production order = 3,73,000 / 50 = ` 7,460

Chapter - 11 : Transfer Pricing2013 - Dec [3] (a) Green Environ Ltd.

(i) Comparative Profitability Statement of Division M (Figures in `̀̀̀)

Alternative Situations

Particulars Sales at `̀̀̀ 25 Transfer at ` ` ` `22

Do nottransfer

Sales Revenue :Market Sales(50,000 units × ` 25)

12,50,000 12,50,000 12,50,000

Transfer to Division-N(10,000units × ` 25)

2,50,000 2,20,000 ............

Total (A) 15,00,000 14,70,000 12,50,000

Variable Cost (at ` 15/unit) 9,00,000 9,00,000 7,50,000

Fixed cost 3,00,000 3,00,000 2,60,000

Total (B) 12,00,000 12,00,000 10,10,000

Total Profit (A - B) ` 3,00,000 27,00,000 2,40,000

Total assets 12,00,000 12,00,000 10,00,000

ROI (Percentage) 25% 22.50% 24%

Manager of Division should not transfer the product at ` 22/unit to Division N becauseit is less than its selling price i.e.` 25/unit and will get low rate of return at ` 22/unit by2.5%(25% - 22.5%).(ii) The lowest transfer price acceptable to Division M is one, which maintains its rate

of return of 24% (ROI without selling to Division N): = (Total Sales Revenue - Total Cost) / Total Assets = 0.24 or, [( ̀ 12,50,000 + 10,000 × Transfer Price (TP)) – 12,00,000] ÷ ̀ 12,00,000 =0.24or, 10,000 TP = 2,88,000 – 50,000 = 2,38,000 or, (Transfer Price) TP = 2,38,000 ÷ 10,000 = 23.80 i.e. ` 23.80 The lowest transfer price acceptable to Division - M is ` 23.80 per unit.

Chapter - 12 : Budgeting & Budgetary Control 2013 - Dec [3] (c)

(i) Saheen Ltd.Fixed Items - Depreciation and InsuranceVariable- Wages and consumable storesSemi- variable - Maintenance, and power & fuel


(ii) Budget for 80% Capital LevelBudgeted Production 80% of 1000 i.e. 800 Units

Particulars Amount in `̀̀̀

Variable CostWages @`2.00 per unitConsumable stores @ ` 1.50 per unitMaintenance : ` 1.00 per unitPower & Fuel : ` 1.00 per unit

Fixed costMaintenancePower & FuelDepreciationInsurance

1,6001,200

800800

5001,0004,0001,000

Total Cost (Variable Cost + Fixed Cost) 10,900

Working Notes:Segregation of semi-variable costs:Maintenance = [1,500 - 1,100] / 400 = ` 1 per unit variable and

Fixed cost = 1,100 - 600 = ` 500. Power & Fuel = [2,000 - 1,600] / 400 = ` 1 per unit variable and

Fixed cost = 1,600 - 600 = ` 1,000(iii) Variable Cost per unit works out to ` 5.50

It consists of wages: ` 2Consumables Stores : ` 1.50Maintenance: ` 1.00 Power & Fuel: ` 1.00 Total Fixed Cost = Maintenance + Power & Fuel + Depreciation + Insurance

= 500 + 1,000 + 4,000 + 1,000 = ` 6,500Computation of Total Costs per unit

Capacity

Particulars 60% 80% 100%

Production (Units) 600 800 1,000

Variable cost per units(`) 5.5 5.5 5.5

Fixed cost per unit (` 6,500 + Production Units) 10.83 8.13 6.5

Total Cost per units (`) 16.33 13.33 12


Chapter - 13 : Standard Costing2013 - Dec [1] (c)Given, Actual quantity = 2,000KgActual rate = ` 12/kgActual Material cost = 2,000 × 12 = ` 24,000Total material cost variance = Material price variance + Material usage variance

= 6,000 (FAV) + 3,000(ADV)= 3,000 (FAV)

Hence, the standard material cost of Actual production: = 24,000+3,000 (F) = ̀ 27,0002013 - Dec [2] (b) ESKAY LTD.

Working: Standard Cost of finished AlloyMaterial Ratio Quantity (Kg) Cost/kg (`̀̀̀) Total (`̀̀̀)

P 2 2 40 80Q 2 2 60 120

R 1 1 85 85

Total Input 5 285(Less) 5% Loss in process (0.25) ---Net Output 4.75 Kg (`) 285

Standard Cost per Kg of output = ` 60

COMPUTATION OF VARIANCES:Total material Cost variance: Std Cost of Actual Production (Output) - Actual materialCost for production 5,80,000 × ` 60 - 2,40,000 × ` 38 = ` 3,48,00,000 - ` 3,35,50,000

2,50,000 × ` 59 1,10,000 × ` 88= ` 12,50,000 (F)

Material Price Variance : (Std Price - Actual Price) × Actual qty consumed X: (40 - 38) × 2,40,000 = ` 4,80,000 (F)Y: (60 - 59) × 2,50,000 = ` 2,50,000 (F)Z: (85 - 88) × 1,10,000 = ` 3,30,000 (A)= ` 4,00,000 (F)

Material Mix Variance : (Input in Std proportion- Actual input) × Std Cost of input/kgX (2,40,000 - 2,40,000) × ` 40 = NilY (2,40,000 - 2,50,000) × ` 60 = ` 6,00,000 (A)Z (1,20,000 - 1,10,000) × ` 85 = ` 8,50,000 (F)

6,00,000 6,00,000 ` 2,50,000 (F)


Yield variance = (Std yield from actual input - Actual input) × Std Cost of finishedproduct

= (6,00,000 × - 5,80,000) × ` 60

=10,000 × ` 60= ` 6,00,000 (F)

Usage Variance = Standard cost (Output) of Actual production/(Output) - Standard Costof Actual quantity Consumed.

5,80,000 × 60 - X: 2,40,000 × 40Y: 2,50,000 × 60Z: 1,10,000 × 85= ` 3,48,00,000 - ` 3,39,50,000 = ` 8,50,000 (F)

Mix Variance + Yield variance ` 2,50,000 (F) + ` 6,00,000 (F)

= ` 8,50,000(F)Chapter - 14 : Uniform Costing2013 - Dec [1] (e)Limitations of Inter firm comparison:(a) Top management shows resistance in sharing of information.(b) Middle management is not convinced with sure comparison.(c) When suitable basis of comparison are not available inter firm comparison

becomes meaningless. (d) When suitable cost accounting system is not present the figures supplied are of

non relevance as they cannot be relied upon for comparison.2013 - Dec [3] (b)Prerequisite for installation of uniform costingC Firms in industry should share information.C There should be a spirit of working with mutual trust and cooperation between

firms.C Sharing of information and ideas should be done freely and frequently.C Bigger firms to share their experience to help the small firm, in improving their

performance. C Uniformity between firms should be established.


Section - B : Cost Records and Cost Audit

Chapter - 15 : Cost Accounting Records and Cost Audit2013 - Dec [1] (f), (g)(f) The exemption from mandatory cost audit is applicable to those 100% EOU,

C who are registered under the policy document as per the Foreign Trade Policyand

C the 100% EOU is functioning within the permissible approved limits as per theForeign Trade Policy.

(g) Every company covered under Companies (Cost Accounting Record) Rules, 2011is required to file a compliance report, irrespective of whether all or any of itsproducts are covered under Cost Audit. Thus the compliance report shall includeproduct groups covered under Cost Audit as well as product groups not coveredunder Cost Audit.

2013 - Dec [5] (a), (b)(a) The appointment of cost auditor under a firm’s name will be subject to the following

conditions:1. All the partners of the firm are full time cost accounting practitioners within the

meaning of Sections 6 and 7 of the Cost and Works Accountants Act, 1959.2. The firm must have been constituted with the previous approval of CG or of

the Central Council of ICWAI as per amended regulation 113 of the Cost andWorks Accountants Act, 1959. The Cost Audit Report shall be signed by 1. Any one of the partners of the firm responsible for the conduct of the cost

audit in his own hand for and on behalf of the firm;2. A proprietary firm can also be appointed as Cost Auditor and in such

cases the report shall be signed by the proprietor himself.

(b) NAVINA LTD(i) STATEMENT SHOWING COMPUTATION OF CAPITAL EMPLOYED

Particulars For the year ended

31.03.2013 31.03.2012 31.03.2011

(Amount in ` lakh)

Gross Fixed Assets : 4,615 4,212 3,845

Less; Depreciation 1,312 1,263 1,224

Net Fixed Assets (A) 3,303 2,949 2,621

Gross Current Assets:

Inventory 625 580 511


Sundry Debtors 334 317 292

Other Loans and Advances 65 58 53

Other Current Assets 32 29 26

Total Current Assets 1,056 984 882


31.3.2013 31.03.2012 31.3.2011

(Amount in ` Lakh)

Gross Current Liabilities

Sundry Creditors 214 187 174

Provisions for expenses 29 34 28

Total Current Liabilities 243 221 202

Net Current Assets (B) 813 763 680

Total Capital Employed (A+B) 4,116 3,712 3,301


31.3.2013 31.03.2012 31.3.2011

(Amount in ` Lakh)

Average Capital employed

2012 - 13 ; 3,914

2011 - 12 ; 3,506.5

Profit before taxes 232 145

Net sales 3,924 3,212

(ii) PB to Capital Employed For the year Ended 31.03.2013:=[(232 ÷ 3,914) x 100] = 5.93%PBT to Capital Employed For the year Ended 31.03.2012:= [(145 ÷ 3,506.5) x 100] = 4.14%

(iii) PBT to Net Sales For the year Ended 31.03.2013=[(232 ÷3,924) x 100] =5.91%PBT to Net Sales For the year Ended 31.03.12= [ (145 ÷ 3,212) x 100] = 4.51%

2013 - Dec [6] (a)(a) The duties of cost auditor are similar to those of statutory auditor of the company.

In addition to those duties certain additional duties are also cast on cost auditorswhich are as follows:


1. Cost auditor shall verify and ensure that proper books of accounts as requiredby Cost Accounting Records Rules have been kept by the company. He isalso duty bound to verify the returns of those branches which are not visitedby him.

2. Cost auditor shall ensure that the Cost Audit Report and the detailed coststatements are in the form prescribed by the Cost Audit Report Rules.

3. Cost auditor’s report shall be based on data which is verified by him. 4. Cost auditor is duty bound to include observations in his report only after

company has been given a chance of commenting on the same.5. Auditor is duty bound to ensure that the indirect expenses are properly

allocated and are absorbed on a reasonable basis.6. To qualify report if there is any need and to give reasons for any qualification

in his report.7. To forward the cost audit report within the prescribed time period.

2013 - Dec [6] (c)Yes, as per the Companies (Cost Accounting Records) Rules 2011, it is mandatory toprepare unit-wise and product/activity-wise cost statements For Compliance Certificatepurposes, no cost statement is required to be submitted. However, if any or all the products/activities of the company is also covered under CostAudit, then for the purposes of submission of Cost Audit Report under the Companies(Cost Audit Report) Rules 2011, a consolidated cost statement for the product group(s)under cost audit is required to be prepared.

Chapter - 16 : Economics for Managerial Decision Making2013 - Dec [1] (h), (i)(h) Determinants of demand are enumerated below:

(1) Price of Commodity(a) Price of the related goods Complementary Goods(b) Substitute Goods or

(2) Competing Goods(3) Income of the household (4) Taste and Preference of Consumers(5) ‘Demonstration effect’(6) Other Factors:

(a) Size of Population (b) Composition of Population (c) Distribution of Income (d) Weather Condition

(i) Demand function, x = 80 + 2P + 5P2

Marginal Quantity demanded = 2 + 10 P


Elasticity of demand = or

Marginal Quantity demanded x = (2 + 10P) x

Elasticity of demand At P = = =

2013 - Dec [7] (a), (b), (c)(a) Demand Forecasting: Demand forecasting is the activity of estimating the quantity

of a product or service that consumers will purchase.Factors involved in Demand Forecasting:(i) Time factor: Demand forecasting may be short-term or long-term. A

short-term demand may cover a period of three months, six months or oneyear but not exceeding one year and long forecasting covers a periodexceeding 5 years.

(ii) Level factor: Demand forecasting may be undertaken at three different levels:(a) Macro level: It is concerned with business conditions over the whole

economy. (b) Industry level: This includes the preparations of sales forecasting by

different trade associations.(c) Firm level: It is an important matter from the managerial view point.

Individual firms forecast their sales.(iii) General or specific purpose factor: General forecast may be useful for the

firm but it also needs commodity forecasts and sales area forecasts (specificforecasts).

(iv) Product: Forecasting varies type of product i.e., new product or existingproduct or well established product.

(v) Nature of the product: Goods can be classified into capital goods andconsumer durable or non-durable goods and services. Demand for a productwill be mainly dependent on nature of the product. Forecasting methods for producer goods and consume/ goods will be differentaccordingly.

(vi) Competition: While making forecasting, market situation and the productposition in particular market should be analyzed.

(vii) Consumer Behavior: What people think about the future, their own personalprospects and about products and brands are vital factors for firm andindustry.

(b) Under Prefect Competition MarketDemand = Supply

16-x2 = 2 x2+ 4Or 16-x2-2x2 - 4 = 0Or -3 x2 = -12


Or x2 = 12/3 = 4x2 = ±2 i.e. 2 or -2

(Since Quantity cannot be negative, ignoring the negative value (-2)(i) Market Price

Y = 16-x2 = 16 - 4 = 12 (Where x = +2)(ii) Consumer Surplus

= -24

= 32 - -24 =

(c) (i) Cost function of Nandini Electricals C(x) = x and

Revenue Function R (x) = x (1,100 - 1.5x)

Then, Profit = R(x) -C(x) = x (1,100 - 1.5x) - x

= 1,100x - 1.5x2 - - 200x

= 900x - 1.5x2 - (Say P)

Marginal profit = = 900 - 3x-

Output required per month to make the MP = 0Hence,

Or, - - 3x - 900 = 0

- 3x2 - 30x + 9,000 = 0 x2 +10x - 3,000 = 0 X2 + 60x - 50x - 3,000 = 0

or, x(x+60) - 50(x+60) = 0or, (x-50) (x+60) = 0 Either x = 50 or x = -60[Since quantity/units cannot be negative value]Hence, The required output level = 50 (thousand) units.

(ii) Total Profit at output x= 50 (thousand) units.

- - 3x - 900 = 1,25,000 /10 - 3,750 + 45,000 = ` 28,750 thousands.


2013 - Dec [8] (a), (b), (c)(a) Main features of perfect competition market:

(1) Large number of buyers and sellers: Under perfectly competitive marketthere is large number of buyers and sellers. Each buyer and seller has noability to influence the ruling price by their independent action.

(2) Homogeneous Products: The products sold by the suppliers are fullyhomogeneous. The commodities available everywhere are the same.

(3) Uniform price: Price is uniform as the products in the market are identical.Price is fixed by all the buyers and sellers in the market.

(4) Free entry and free exit: Under perfect competition buyers and sellers areabsolutely free to enter and leave the market. No restriction is imposed ontheir entry and exit.

(5) Perfect knowledge about the market: Both buyers’ and-sellers must haveperfect knowledge about the conditions of the market. Sellers must know theruling market price charged by other sellers from the buyers. Similarly buyersknow the prices charged by different sellers.

(6) Perfect mobility: Various factors of production are perfectly mobile within theindustry. Factors of production can freely move from one occupation toanother and from one place to another.

(7) Absence of transport cost: Price being charged by the firms is free oftransportation cost. Price is not affected by the cost of transportation of goods.

(b) (i) Cost (c) = x2 + 780 x + 25,000

Demand (D), x = =

Or, 4x = 60,000 - PP = 60,000 - 4X

So total Revenue per x sets, R = 60,000 x - 4x2

Maximum Revenue is obtained at Marginal Cost = Marginal RevenueMR = dr/dx

= 60,000 - 8xMC (Marginal Cost) = dc / dx

= 2x + 780When, MC= MR

2x + 780= 60,000 - 8xor, 10x = 59,220or, x= 5,922 Sets

Hence, 5,922 sets to be produced per week at which the firm will get maximumnet revenue.

(ii) Monopoly Price = 60,000 - 4x = 60,000 - 4 × 5,922 = ` 36,312


(c) Efficiency of a small manufacturing concern, E = + 3W - 39.2

For the Maximum Efficiency

= 0, and should be negative.

= - x 3W2 + 3 =0

3W2 = 1,200, => W2 = 400, => W= 20

= - , ˆ at w= 20 = = <0

Maximum Efficiency at w = 20Hence strength of workers = 20

2013 - Dec [9] (a), (b), (c)(a) (i) When the product is new but with a high degree of consumer acceptability, the

firm should decide its pricing strategy in favour of Skimming Pricing Strategy,i.e., an approach under which a producer sets a high price for a new high-endproduct or a uniquely differentiated technical product. Its objective is to obtainmaximum revenue from the market before substitutes products appear. Asthe demand for the new product is relatively inelastic the high prices will notstop the new consumers from demanding the product. If the life of the productpromises to be a short one, the management should fix high price so that itcan earn, as, much profit as possible and in as short a period as possible.

(ii) The product is already served in the market by well-known brands. AjantaFoot wear has to choose Penetration Pricing Strategy. Penetration pricing isthe practice of offering a low price for a new product or service during its initialoffering in order to attract customers away from competitors. The reasoningbehind this marketing strategy is that customers will buy and become awareof the new product due to its lower price in the marketplace relative to rivals.

(b) Given to assume closed economy, E = C+I+GGiven that, C=15 +0.9Y, I = 20+0.05Y and G = 25

ˆ E = 15 + 0.9Y +20 + 0.05Y + 25E = 60 + 0.95Y

For equilibrium values of Y,E = Y (Given) 60 + 0.95Y =Y

Or Y = 1,200For equilibrium values of C,

C = 15 + 0.9 Y,C = 15 + 0.9 x 1,200C = 1,095

For equilibrium values of I,I = 20 + 0.05 Y


I = 20 + 0.05 x 1,200I = 80

When there is no government spendingY = 35 + 0.95Y,Y = 700C = 15 + 0.9 Y = 15 + 630 = 645I = 20 + 0.05Y = 20 + 0.05 × 700 = 55

(c) Revenue function, R=10Q

Cost function, C=20,000 +50

Profit (P)= R-C = 10Q -20,000 + 50 = 10Q -20,000 + 50 (profit

function)To find number of Units to get the Maximum Profit

= 0, and should be negative.

=

= 10 - = 0

10 - = 0

Q = 64,000

= = - = - which is negative.

Profit (P) is maximum at Q = 64,000 UnitsHence, 64,000 to be sold to get maximum profit.

Maximum profit = 10 x 64,000 – 20,000 – 50

= 6,40,000 - 20,000 - 3,20,000= ` 3,00,000

Shuchita Prakashan (P) Ltd.25/19, L.I.C. Colony, Tagore Town,

Allahabad - 211002Visit us : www.shuchita.com

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Appendix Solved Sca Solution/New Syllabus/… · Solved Scanner Appendix CMA (CWA) Inter Gr. II Paper 10 2 Chapter - 4 : Contract Costing 2013 - Dec [4] (b) Computation of Estimated