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Reorder point is a level at which a new order must be placed so that the inventory is renewed before the stock reaches zero level. So the things that should be taken care in a reorder point are:
MM Ltd. is a renowned name in manufacturing hand puppets for children. Its two most selling varieties are Alphabets and Domestic animals. Sales price/unit: Alphabets Rs.210, Domestic Animals Rs.360. Variable Cost/unit: Alphabets Rs.140, Domestic Animals Rs.190. Sales mix: 40% Alphabets, 60% Domestic Animals. The fixed expenses of MM Ltd. is Rs.75,000. The weighted contribution for the two products will be:
Janata Foods Ltd. is a restaurant situated on a national highway near Hyderabad. The following figures: Stock of Raw Material Rs.1,50,000, Short-Term Loans Rs.1,83,000, Trade Creditors Rs.96,000, Trade Debtors Rs.2,25,000, Dividend Payable Rs.1,50,000, Tax Payable Rs.1,32,000, Short-Term Investments Rs.2,28,000. According to the above information, gross working capital will be:
Ryan started a mask manufacturing business with his Brother. With planning and hard work, they were able to sell 5000 masks in the first year. But they did not earn any profit. Both were happy because they were not at loss either and the revenue generated was equal to the cost. Now they were moving towards earning profit in the second year. Out of the following, identify the component of the financial plan discussed above.
Karuna manufactures hair oil through her company Glider oils. Net income earned = Rs.8,40,000, Equity = Rs.4,00,000. Return on equity will be:
_______ is required to meet day-to-day expenses and to facilitate smooth functioning of the business.
Harshdeep is the stock keeper of Neha Textiles Ltd. The company is into converting cotton yarn into fabric and then further computerised printing on the same to add value to the fabric. He wants to know the ideal quantity of yarn to be ordered so that the production process does not stop. How can he know the correct time to place an order? (i) By calculating Break-even point (ii) By calculating Re-order point (iii) By calculating Economic order quantity (iv) By calculating lead time
Identify which of the following is NOT a current liability for a furniture manufacturing unit.
Manjush sold a head set for Rs.2100. If the purchase price of the product is 80% of its selling price, the profit earned by manjush is:
The Fancy Store, a ready-made garments retail shop sold 10,000 shirts at Rs.400 per shirt during the year. Cost of placing an order and receiving goods is Rs.2,000 per order. Inventory holding cost is Rs.1000 per year. Calculate the Economic Order Quantity for The Fancy Store.
Current assets of a firm are: Cash Rs.50,000, Debtors Rs.75,000, Inventory Rs.1,00,500. On the basis of this, the Gross Working capital will be:
When total current assets exceed total current liabilities, it refers to:
_______ is the length of time between a firm purchase of inventory and receipt of cash from accounts receivables.
Give the two forms of budgeting process.
Gupta is the owner of KYC stores dealing in grocery items. He has an equity stake of Rs.4,00,000 in the business. He has borrowed Rs.6,00,000 from State Bank of India. His net profit for the year is Rs.1,40,000. The Return on Equity for Gupta will be 23.33%.
Gross working capital means:
Ramandeep is a technical entrepreneur who started developing interactive websites of businesses. Due to lot of competition in this field he is experiencing a decline in the demand. He wishes to understand his revenue position as compared to his investment. Which one of the following combinations would help him in assessing the profitability of his business? (i) Economic Order Quantity (ii) Return on Investment (iii) Return on Equity (iv) Break-even analysis
From the information given below, calculate the circulating capital of a company: Stock Rs.60,000, Debtors Rs.55,000, Cash Rs.65,000, Short-term investments Rs.20,000, Trade payables Rs.20,000, Short-term loans Rs.10,000, Outstanding expenses Rs.5,000.
Sahiba has a boutique in Nagpur, which she started in 2020. She had invested Rs.2,00,000 from her savings and borrowed Rs.3,00,000 from the bank @ 10% per annum. She made a net profit of Rs.50,000 in the year 2021-2022. In the above case the Return on Equity is:
Break-Even Point is the level where:
Raghuram has been appointed as the stock incharge in a readymade shirt manufacturing company. The Production Manager asks Raghuram to ensure the availability of fabric without any interruption so that there is no stock-out situation. For this Raghuram wants to know the re-order point of fabric for the company. He found out the procurement lead time is 2 months, and the demand during this period is expected to be 300 bales of cotton fabric per month. So the order should be placed when the stock reaches:
Choose the correct formula from the following for calculating Gross Working Capital:
Itika Sharma runs an online business for eco-friendly water bottles. The annual demand for the HydroSmart bottles is 10,000 units. The annual holding cost per unit is Rs. 40, and the cost to place an order is Rs. 8,000. Calculate the Economic Order Quantity (EOQ) for HydroSmart bottles.
Calculate the Economic Order Quantity from the following information: Annual Consumption 120 units, Cost of placing and receiving an order Rs. 20, Price per unit Rs. 100, Storage cost as a percentage of average inventory 12%.
Why is it important for an entrepreneur to do break even analysis?
Raja & Co. has the following items in its Balance Sheet: Stock Rs.50,000; Trade creditors Rs.32,000; Debtors Rs.75,000; Cash Rs.1,00,000; Dividend Payable Rs.50,000; Tax Rs.44,000; Short-term loan Rs.61,000; Short-term investment Rs.76,000. Calculate gross and net working capital.
A stationary shop sells 30,000 pens per year. Purchase cost is Rs. 2 per pen, holding cost is 20% of the purchase cost, ordering cost is Rs.15. Calculate EOQ from the details for the stationery shop.
Give the meaning of Cash Conversion Cycle. How is Cash Conversion Cycle of a trading concern different from a manufacturing concern?
The following figures are extracted from the balance sheet of Swadesha Ltd. Net profit after tax = Rs.2,00,000, Net profit before tax = Rs.2,80,000, Total Investment (Owned + Borrowed) = Rs.4,00,000, Own funds = Rs.1,00,000. Calculate Return on Investment and Return on Equity for Swadesha Ltd.
A factory is engaged in manufacturing plastic buckets. Sales: Rs.1,00,000, Direct Labour Cost (1000 units) = Rs.10,000, Direct Material Cost (1000 units) = Rs.25,000, Direct Expenses (1000 units) = Rs.5,000, Fixed Cost = Rs.30,000. Find out Variable cost per unit and the Total Cost.
What do you understand by Pareto Principle and why it is called the 80/20 rule?
Tic Tac Electricals Ltd. manufactures switches and plugs in an industrial area in the state of Haryana. On an average, they manufacture 2500 switches per day. Their raw material supplier is based in Punjab and takes 5 days to deliver the requirement once the order is received. Estimate the reorder level for Tic Tac Electricals Ltd.
The following information relates to the newly established Boutique - The Pearl: Total capital invested Rs.40,00,000 out of which Rs.20,00,000 is a bank loan at 15% per annum. Net Profit after Tax is Rs.6,00,000. Calculate Return on Equity for The Pearl Boutique.
Kwality Stores is famous for its woollen garments sourced from Ludhiana. Its most popular selling item is its sweat-shirt which is sold at Rs.1,000 per piece. The cost of placing an order and receiving goods is Rs.500 per order. Its holding cost is Rs.300 p.a. Economic order quantity for Kwality Stores is 200 sweat-shirts. Calculate the annual demand of the sweat-shirts.
A Beauty parlour had varying number of customers during five weeks. From the given information, calculate Unit Price per customer. (Table with 5 weeks data provided)
Why is EBITDA calculated and discuss its two components.
Tutu Pump Co. uses about 7500 valves per year. The valve costs Rs.15 per unit and the carrying cost is estimated to be Rs.3 per unit. The cost of placing an order and its processing is Rs.18. Calculate the Economic Order quantity (EOQ). Give any one benefit that Tutu Pump Co. derives after calculating the EOQ.
Aditya Bearings Ltd. are the manufacturers and suppliers of ball bearings to fan manufacturing companies. The company requires 900 kg of wrought iron for its production process. The cost of placing each order is Rs.50 and carrying cost is Rs.100. Calculate Economic Order Quantity.
Calculate the Economic Order Quantity from the following information: (a) Annual consumption 120 units, (b) Cost of placing and receiving an order Rs.20, (c) Price per unit Rs.100, (d) Storage cost as percentage of average inventory 12%.
Flavouright Foods Ltd. started a business of making nachos (corn chips) in three variants: Classic Cheese, Toasted Corn and Tangy Tomato. Fixed costs are Rs.38,000. Sales price and variable costs per unit are given. Packets sold: Classic Cheese 100, Toasted Corn 40, Tangy Tomato 60. From the above information calculate: (a) Weighted contribution margin per unit. (b) Breakeven point total and per product.
(a) Give the meaning of Cash Conversion Cycle (CCC). (b) State the relationship between the CCC and the quantum of working capital required by a business. (c) Calculate the Gross working capital for Ojas Ltd. from given details.
Calculate the Return on Equity (ROE) for Neerja International from given details. Monthly Sales revenue Rs.10,00,000, Cost of goods sold Rs.4,00,000.
(a) Give the meaning of cash conversion cycle. (b) How does the nature of business influence its cash conversion cycle? Explain with the help of a diagram.
Raman is a potential investor who wishes to be a part of Equity Linked Saving Scheme (ELSS). He has given the particulars of two companies. Compare the Return on Equity of the two companies and suggest to Raman where he should invest. (Data table provided)
A hotel had varying number of guests during five weeks. Information regarding number of guests and average weekly billing provided. What is the Unit of Sale and Unit Price in this case? If the cost of goods sold or variable cost is 60% of the sales price, calculate the unit cost and the gross profit.
Crunches started a business of making potato chips in three variants, Classic Cheese, Toasted Corn and Tangy Tomato. Fixed costs are Rs.38,000. Sales price and variable costs per unit are given. Packets Sold: Classic Cheese 100, Toasted Corn 40, Tangy Tomato 60. From the given information calculate: a) Weighted contribution margin per unit. b) Breakeven point in units per product. c) Breakeven point in rupees total and per product.
A manufacturing plant produces four different types of machinery tools. Products A, B, C, D with Selling Price, Variable Cost, Allocated Fixed Expenses per month given. Compute break-even level for each of the product.
Parvesh has started a restaurant by the name of Spices of India by spending Rs.50,00,000. He invested Rs.10,00,000 of his own and took a loan of Rs.40,00,000 from State Bank of India @ 6% per annum. His monthly sales revenue is Rs.20,00,000 and monthly cost of goods sold is Rs.10,00,000. He pays a monthly salary of Rs.2,00,000. The GST rate is 18%. Calculate (a) Return on Investment, and (b) Return on Equity.
A hotel had varying number of guests during five weeks. Information regarding number of guests and average weekly billing is presented in a table. (a) What is the Unit of Sale and Unit Price in this case? (b) If the cost of goods sold or variable cost is 60% of the sales price, calculate the unit cost and the gross profit.
Baked Delight Ltd. has diversified into flavoured fox nuts and popcorn. Sale price per unit: Classic salted Fox nuts Rs.120, Caramel salted Popcorn Rs.80. Variable cost per unit: Fox nuts Rs.70, Popcorn Rs.30. Sales mix percentage: Fox nuts 40%, Popcorn 60%. Fixed cost Rs.1,00,000. Calculate Break-Even Point in units and rupees.
Happy Hands Ltd. manufactures liquid hand wash in three varieties. Fixed cost Rs.2,49,000. Selling Price per 100ml and Variable Cost per 10ml given for Scrub, Gel, Foam with Sales Mix 40%, 30%, 30%. Calculate: (a) Total weighted average contribution margin. (b) Break-even-quantity for each variety. (c) Break-even-point in rupees for Scrub Hand Wash.
Kwality Stores is famous for its woollen garments sourced from Ludhiana. Its most popular selling item is its sweat-shirt which is sold at ₹ 1,000 per piece. The cost of placing an order and receiving goods is ₹ 500 per order. Its holding cost is ₹ 300 p.a. Economic order quantity for Kwality Stores is 200 sweat-shirts. Calculate the annual demand of the sweat-shirts.
(a) Give the meaning of Cash Conversion Cycle (CCC). (b) State the relationship between the Cash Conversion Cycle (CCC) and the quantum of working capital required by a business. (c) Calculate the Gross working capital for Ojas Ltd. from the details given below : Amount (₹) i. Stock 1,00,000 ii. Debtors 2,50,000 iii. Creditors 82,600 iv. Cash 38,000 v. Short-term Investments 2,00,000 vi. Short-term Loan 1,42,000 vii. Long-term Investments 3,00,000 viii. Outstanding expenses 50,000
Calculate the Return on Equity (ROE) for Neerja International, for the year 2020 – 2021 from the details given below : Details / Amount (₹) i. Investments 10,00,000 ii. 12% Loan from State Bank of India 2,00,000 iii. 8% Debentures 2,00,000 iv. Fixed expenses per month – Salary 1,50,000; Rent 50,000; Electricity & Utilities 10,000 v. Depreciation 35,000 vi. Tax Rate 30% Monthly Sales revenue was ₹ 10,00,000 and Cost of goods sold was ₹ 4,00,000.
From the information given below, calculate the circulating capital of a company : Assets (₹) : Stock 60,000; Debtors 55,000; Cash 65,000; Short-term investments 20,000 Liabilities (₹) : Trade payables 20,000; Short-term loans 10,000; Outstanding expenses 5,000
Sahiba has a boutique in Nagpur, which she started in 2020. She had invested ₹ 2,00,000 from her savings and borrowed ₹ 3,00,000 from the bank @ 10% per annum. She made a net profit of ₹ 50,000 in the year 2021 – 2022. In the above case the 'Return on Equity' is :
Break-Even Point is the level where :
Give the meaning of 'cash conversion cycle'. How does the nature of business influence its cash conversion cycle ? Explain with the help of a diagram. 'Angel Investment' not only brings in funds but also an invaluable mentor to the business. In the light of this statement state any three features of angel investors.
'Baked Delight Ltd.' is a well known name in breads and bakery products. It has diversified into flavoured fox nuts and popcorn. The two were introduced as smart snacking options for health and diet conscious people. To start with, both will be sold in a standard packing of 50 gm each. Fixed cost for these will be ₹ 1,00,000. Sale price and variable cost per unit is as follows : Particulars | Classic salted Fox nuts | Caramel salted Popcorn Sale price per unit (₹) | 120 | 80 Variable cost per unit (₹) | 70 | 30 Sales mix percentage (%) | 40 | 60 From the given information calculate Break-Even Point in units and rupees.
Choose the correct formula from the following for calculating 'Gross Working Capital' :
A Beauty parlour had varying number of customers during five weeks. From the given information, calculate 'Unit Price' per customer. Weeks | Number of Customers | Average Amount billed per customer (in ₹) 1 | 20 | 200 2 | 34 | 170 3 | 26 | 142 4 | 44 | 462 5 | 36 | 350
'Happy Hands Ltd.' manufactures liquid hand wash for children with minimal chemicals. They have three varieties of liquid soap. The fixed cost for the production process is ₹ 2,49,000. Variety | Scrub Hand Wash | Gel Hand Wash | Foam Hand Wash Selling Price per 100 ml in (₹) | 155 | 175 | 195 Variable Cost per 10 ml in (₹) | 75 | 95 | 105 Sales Mix | 40% | 30% | 30% Form the above data, calculate the following : (a) Total weighted average contribution margin. (b) Break-even-quantity for each variety of liquid hand wash. (c) Break-even-point in rupees for Scrub Hand Wash.
'Return on Investment' is a critical profitability ratio. It is calculated as follows : Return on Investment (ROI) = (Net Profit / __________) x 100 Choose the correct option from the following :
Which of the following is not a current liability ?
'Techworks' is a company selling electronic products. To keep track of inventory and manage sales efficiency each and every item in the inventory is assigned a unique code which signifies certain aspects of the item. Its unique code is a combination of alpha and numeric and is used not only for data collection, but also for further manipulation for deriving meaningful statistics and decision-making. However, over time, due to advancement in technology, certain items may not be used and their demand drops off. 'Techworks' faces a challenge of dealing with these products, particularly with technology evolving quickly. Some of the items that make up the inventory of 'Techworks' as discussed above are ____________ and ____________.
Given below is the 'Cash Conversion Cycle'. (The diagram shows a cycle: Cash → Stock of goods → Sales → Debtors → Cash.) (i) Identify the type of business to which the above cash conversion cycle belongs. (ii) Draw a 'cash conversion cycle' for another type of business other than that identified in (i) above. Give the meaning of ABC analysis technique of inventory control.
'Kwality Book Store' sells 40,000 chart papers per year. The demand is constant throughout the year. The purchase cost is ₹ 10 per chart paper. Holding cost per annum is 20% of purchase cost, ordering cost is ₹ 100 per order. Calculate the Economic Order Quantity.
'Royal Fruit Juice Ltd.' are the manufacturers of different types of fruit juices. They do not use any artificial flavours in their products. The fixed cost of the production process is ₹ 1,76,000. Given below is information about Mango, Orange and Guava fruit juices. Type of Juice | Mango (Per Litre) | Orange (Per Litre) | Guava (Per Litre) Selling Price (₹) | 150 | 135 | 100 Variable Cost (₹) | 80 | 65 | 60 Sales Mix Percentage | 20% | 40% | 40% From the above data, calculate the following : (a) Total weighted average contribution margin per unit. (b) Break-even point in units of sales mix. (c) Break-even point (in ₹) for each type of juice.
Which of the following is not included while calculating Gross working capital ?
If a company's 'cash conversion cycle' is 45 days, it implies :
While calculating the Economic Order Quantity, it is necessary that a company should know how much the 'Inventory Carrying Cost' is and what does it include. From the following, identify the item which is not included in 'Inventory Carrying Cost' :
'Zen MotoCorp', a leading motorcycle manufacturer, requires batteries for its production units. The procurement lead time is two months and the demand during this period is expected to be 2000 batteries per month, making its reorder point at 4000 batteries. Fresh supplies should arrive just as the stock reaches zero. However, due to variability in the rate of demand (or consumption) as well as in the supply or manufacturing lead time etc., it may reach a zero stock status before the supply arrives. To cater to such variability, it decides to add 500 batteries to its reorder level. The reorder level would now be 4500 batteries. The addition of 500 batteries in the reorder point is known as :
'Tech Supplies Ltd.' sells bluetooth speakers and needs to maintain a smooth supply to meet customer demand. Annual quantity of bluetooth speakers sold by the company is 2500 units. Cost of placing an order and receiving the bluetooth speakers is ₹ 50 per order. Inventory holding cost per unit is ₹ 25 per annum. Calculate the Economic Order Quantity (EOQ) for 'Tech Supplies Ltd.' 'Sunshine Fabrics Ltd.' earned a net profit of ₹ 50,000 last year. The shareholders' equity is ₹ 2,50,000 and the company took a loan of ₹ 2,50,000. Interest on loan @ 10% per annum is ₹ 2,500. Calculate Return on Equity (ROE) and Return on Investment (ROI) for 'Sunshine Fabrics Ltd.'
'Star Bakery Pvt. Ltd.' produces two types of cakes — Chocolate Cake and Vanilla Cake. The company wants to know the break-even point of each type of cake. For the same, the following information is available : Product | Selling Price Per Unit (₹) | Variable Cost Per Unit (₹) | Sales Mix % Chocolate Cake | 200 | 120 | 40 Vanilla Cake | 150 | 90 | 60 Total fixed cost is ₹ 1,15,600. (a) Calculate the break-even point in units of sales mix. (b) Calculate the number of units of each product at break-even point. (c) Also calculate break-even point in rupees.