UNIT-1

1.With a neat sketch describe the problem solving process in decision making.

2. Distinwish clearly between strategy and tactics with suitable examples.

3. With appropriate examples elaborate on the different areas in which an engineer may
acts as
a decision maker
4. Differentiate between intuition and analysis .Support your answer with suitable
examples.
5.What is decision making? Briefly explain the importance of decision making in
engineering
economics
6. With a practical quote illustrate the relation between engineering and economy

7. Discuss the role of engineers in decision making. Support your answer with suitable
examples.

8. Differentiate between tactics and strategy. Support your answer with suitable
examples.

9.What is the importance of cash flow diagram in economic analysis? Explain with
suitable
Examples.
10.What is cash flow diagram? Discuss from borrower’s and lender’s point of view with
suitable examples.

11.Briefly explain (i) Nominal interest rate (ii) Effective interest rate (iii) Continuous
compounding.

12.A company is planning to buy an inspection device for Rs.20,00, 000. The expected
life of the device is 7 years and the expected annual operating cost and taxes are Rs.70,
000 for the first year with an added increase per year Rs.2000 for years 2 to 7.
Maintenance cost will be zero in the first two years because of warranty. But are
expected to be Rs. 20,000 in 3rd year, Rs.35,000 in 4th year , Rs.50,000 in fifth year and it
will b Rs 60,000 for the year 6 and 7. What is the minimum desired annual economic
benefit of the device? The company uses an interest rate of 10% pa.

13.A person is planning for his retired life .He has 15 more years of service. He would
like to deposit Rs 1,00,000 at the end of first year and there after he wishes to deposit
the amount with an annual increase of Rs 15000 for the next 9 years with an interest
 th
rate of 8%pa.Find the maturity amount at the end of 10 year. If his requirement at the
th
end of 10 year is Rs 30, 00,000, is this investment pays the desired amount?If not what
is shortage amount?
14.A person wishes to have a future sum of Rs.50, 00,000 to start a new business after
10 years from now. There are two alternatives available to him. Suggest the best
alternative to get the required future amount under single payment deposit scenario.

Nationalized Bank Private Bank

Interest rate =12%, Compounded annually Interest rate =11%, Compounded
quarterly

15.A company is thinking of purchasing a small truck that has a first cost of Rs.15,
00,000 and is to be kept in service for five years at which time the salvage value is
expected to be
Rs.5, 00, 000. Maintenance and operating cost are estimated at Rs.30, 000 in the first
year and will increase at a rate of Rs.4000 per year. Determine the present worth of this
vehicle using an interest rate of 6%pa.

16.A person invests a sum of ₹ 6,000 every month in a bank at a nominal interest rate of
7 % for 10 years, the compounding is done quarterly. At the end of 10th year if his
requirement is
₹ 12, 00,000, is this investment pays him the desired amount? If not what is the
shortage fund?

17.A company is planning to expand its business after 10 years from now. The
expected money
required for the expansion programme is Rs. 8,00,00,000. The company can invest
Rs.50, 00, 000 at the end of every year for the next six years. If the assured rate of return
of investment is 15 %pa for the company, check whether the accumulated sum in the
account would be sufficient to meet the fund for the expansion programme. If not, find
the difference in amounts for which the company should make some other arrangement
after 5years.

18.If A wants to invest starting with ₹10 Lakhs first year and decreases by ₹1Lakh
everyconsecutive years for 6 years, calculate final value and present worth at a
compound
interest of 15% annually.

19.A manufacturing firm has agreed to pay Rs 30,000 in royalties at the end of each
year for 5 years for the use of a patented product design. If the payments are left in the
company, interest on the retained funds will be paid at an annual rate of 8% pa.
compounded annually (i) What amount will be available in 5 years under these
conditions? (ii) How large would the uniform annual payments have to be if the patent
owner insisted that a minimum of Rs 2,50,000 be accumulated in the account by the
end of 5 years?

20.A company three yers ago borrowed Rs 40,000 to pay for a new machine tool,
agreeing to repay the loan in 100 monthly payments at an annual nominal interest rate
of 12% compounded monthly. The company now wants to pay off the loan.How much
would this payment be, assuming no penaulty costs for early payouts?

UNIT-2
1.List and explain conditions present worth comparison

2.What is rule 72 as applied to present worth comparisons? Support your answer with
appropriate examples.

3. What are the ingredients of a present worth comparison and explain the conditions
for present worth comparisons.

4. Compare present worth analysis of assets with equal lives and unequal lives.

5. Elaborate on present worth comparison of cost dominated and revenue dominated

cash flows. Support your answer with appropriate examples.

6. Elaborate on payback period method of comparison. Support your answer with

appropriate example.

8.The following alternatives are available for a company. Compare the PW of

alternatives

using an interest rate of 7%pa

Particulars Plan A Plan B Plan C

Life(Years) 4 6 2
First Cost (Rs) 10,00,000 8,00,000 12,00,000
Annual Cost (Rs) 50,000 40,000 45,000

9.The following alternatives are available for a company. Compare the PW of

alternatives

using an interest rate of 7% pa

Particulars Plan A Plan B Plan C

Life(Years) 6 6 6
First Cost (Rs) 6,00,000 8,00,000 10,00,000
 Annual Cost (Rs) 40,000 30,000 35,000

10.Given the following information related to an improvement project, estimate the

present worth of the proposal using present worth method select the best machine for
implementation

Particulars Project A Project B

Investment (Rs) 40,00,000 50,00,000
Salvage value (Rs) 4,00,000 5,00,000
Annual Receipts (Rs) 7,00,000 2,00,000
Annual costs(Rs) 1,00,000 1,50,000
Life (Years) 5 10
Interest rate 15%pa 15%pa

11.The following alternatives are available for investor:

Particulars Plan A Plan B Plan C

First Cost(Rs) 35,00,000 50,00,000 70,00,000
Annual cost (Rs) 2,00,000 1,80,000 2,00,000
Life (Years) 6 3 4
Compare the present worth of the alternatives using an interest rate of 7% pa.Suggest
the best plan.

12.The data three alternatives are as follows:

Investment Resale Annual net

Alternative Life (Years)
(Rs) Value(Rs) cash flow (Rs)
A 60,00,000 10,00,000 3 26,00,000
B 80,000,00 20,00,000 6 25,00,000
C 70,00,000 15,00,000 6 30,00,000
Which plan is to be selected based on payback period method of comparison.

13..Machine A has a first cost of Rs 90,000,no salvage value at the end of 6 year useful
life,and annual operating costs of Rs 50,000.Machine B costs Rs 1,60,000 and has an
expected resale value of Rs 40,000 at the end of its 9 year economic life. Operating
costs for machine B are Rs 40,000per year. Compare and suggest the beat alternative
by adopting present worth method of comparision. Assume an annual interest10% pa.

14.Machine A has a first cost of Rs 10,00,000, salvage value at the end of 6 years of
useful life is Rs 2,50,000 and annual operating costs of Rs 50,000.Machine B costs Rs
11,60,000 and has an expected resale value of Rs 2,00,000 at the end of its 6 year
economic life. Operating costs for machine B are Rs 40,000per year. Compare the two
alternatives on the basis of their future worth with an annual interest of 10%pa.

15.A project involves an initial outlay of Rs. 30, 00,000 and with the following
transactions for the next five years. The salvage value at the end of the life of the
project after five years is
Rs. 2, 00,000. Draw a cash flow diagram of the project and find its present worth by
assuming i = 15%pa, compounded annually

End of Maintenance and Revenue

Year Operating cost (Rs) (Rs)
1 2,00,000 9,00,000
2 2,50,000 9,10,000
3 3,00,000 9,20,000
4 3,00,000 9,30,000
5 4,00,000 9,40,000

16.An automobile company recently advertised its car for a down payment of Rs. 15,
00,000. Alternatively, the car can be taken home by customers without making any
payment, but they have to pay an equal monthly installment of Rs. 25,000 for 100
months at an interest rate of 12% pa, compounded annually. You are asked to advise
the best alternative for the customers based on the present worth method of
comparison.

17..A company has two alternatives for satisfying its daily travel requirements of its
employees for the next five years:
Alternative 1: Renting a vehicle at a cost of Rs. 10, 00,000 per year.
Alternative 2: Buying a vehicle for Rs. 5, 00,000 with an operating and maintenance cost
of Rs. 3, 50,000 per year. The salvage value of the vehicle after five years is Rs. 1,
00,000.Select the best alternative based on the present worth method of comparison
using the interest rate of 20%, compounded annually.

18.A new Rs 16400 automatic machine will have operating cost of Rs 0.30/unit
produced whereas the existing machine costs Rs 0.70/unit. The existing machine has a
market value of Rs 8700 now and has another five years of life. It would costs Rs 500 to
remove the existing machine and install new one. If the firm requires 3 years payback
period, how many units must be produced annually to justify new machine?

19.Creative Investment Ltd. accepts Rs. 10,000 at the end ofevery year for 20 years and
pays the investor Rs. 8, 00,000 at the end of the20th year. Innovative Investment Ltd.
accepts Rs. 10,000 at the end ofevery year for 20 years and pays the investor Rs. 15,
00,000 at the end ofthe 25th year. Which is the best investment alternative? Use present
worthmethod of comparison with i = 12% pa.
20.A man owns a cornmercial plot. He must decide which of theseveral alternatives to
select in trying to obtain a desirable return on hisinvestment. After much study and
calculation, he decides that the two bestalternatives are as given in the following table:
Description Build gas station Build softice-cream Factory
First cost (Rs.) 20,00,000 36,00,000
Annual property taxes(Rs.) 80,000 1,50,000
Annual income (Rs.) 8,00,000 9,80,000
Life of building (years) 10 10
Salvage value (Rs.) 2,00,000 4,00,000
Evaluate and suggest the best the alternatives based on the future worth method of
comparision at i = 12%.pa

UNIT-3
1. Explain the following.with respect to asset life
i) Service life ii) Accounting life iii) Economic life iv) Ownership life

2. ”Economic comparison involving assets with perpetual life.” Use only interest rate
instead of capital recovery factor.Justify this method

3.Compare equivalent annual worth method and annual average cost method .support
your answer with appropriate examples.

4. Compare AAC method with EAC method of comparison.

5. Elaborate on the importance of rate of return calculation. Support your answer with
appropriate example.

6.List and elaborate on IRR misconception.

7.Elaborate on MARR, IRR and ERR

8.Comapre MARR with IRR . Suport your answer with suitable example.

9. A drilling machine can be purchased for Rs 10 lakhs and ued for 5 years after which it
can be sold for Rs 1 lakh. As an alternative another drilling machine is available for
leasing at Rs 3.5 lakhs per annum.If the company expects 20% on investment with
yearend cash flows, which option should be selected? Adopt equivalent annual worth
method of comparison for the analysis.

10. An investment of Rs 15, 00,000 in an off gas monitoring system will have a salvage
value of Rs 70,000 after an economic life of 5 years. Maintenance and operating costs
are Rs 60,000 per year and the firm cost of capital is 10%.Assess the average annual
cost of this investment?
11. HAP company has three proposals for expanding its business operations. The
details are as follows:
Annual Revenue
Alternatives Initial cost (Rs) Life (Years)
(Rs)
A1 25,00,000 8,00,000 10
A2 20,00,000 6,00,000 10
A3 30,00,000 10,00,000 10
Assuming an interest rate of 8% pa .Find the best alternative using annual
equivalent worth method of comparision.

12. The following two machines are being considered for purchase since they are
multipurpose. Evaluate which alternative should be purchased using the annual
equivalent method.
Description Machine A Machine B
Capital cots (Rs) 13,00,000 8,00,000
Labour cost (Rs) 80,000/year 90,000/year
Maintenance cost (Rs) 30,000/year 40,000/year
Life (Years) 10 10
Salvage value (Rs) 2,00,000 2,00,000
Cost of capital 10% pa 10% pa

13. Maruthi suzuki company is evaluating three robots for possible use in its assembly
operation.
Description Robot A Robot B Robot C
First cost 60,00,000 75,00,000 80,00,000
Annual O& M cost(Rs) 3,00,000 4,50,000 4,00,000
Expected annual income
5,00,000 4,50,000 3,80,0000
(Rs)
Expected salvage value
5,00,000 5,00,000 5,00,000
(Rs)
Assuming a life of 4 years and a desired interest rate of 8% pa. Assess the equivalent
annual worth of robots and suggest the best one.

14. Two possible routes for laying a power cable are under study. Data are as follows.

Description Arround the Lake Under the Lake

Length(Km) 15 5
First Cost (Rs) 1,50,000/Km 7,50,000/Km
Life(Years) 15 15
Maintenance Cost (Rs) 6000/Km/Year 12000/Km/Year
Salvage Value (Rs) 90,000/Km 1,50,000/Km
Yearly Power loss (Rs) 15,000/Km 15,000/Km
If 15% interest rate is used, should the power line be routed Around the Lake or Under
the Lake.?Adopt equivalent annual worth method of comparison.

15. Analyze the following proposals using cash flow diagram and find the best proposal
using AAC method and EAC method of comparison.
Pariticulars Proposal I Proposal II Proposal III
First cost (Rs) 7,00,000 9,00,000 10,00,000
Salvage value (Rs) 2,00,000 3,00,000 3,50,000
Annual disbursement(Rs) 1,80,000 2,30,000 3,50,000
Annual receipts (Rs) 36,00,000 4,60,000 5,20,000
Life of all proposals is 8 years and interest rate to be used is 10% pa.

16. Thripati co. ltd is in the process of selecting the best alternatives among the
following three mutually exclusive alternatives.
Annual revenue
Alternative Investment (Rs) Life (Years)
(Rs)
A1 5,00,000 1,00,000 10
A2 8,00,000 1,40,000 10
A3 3,00,000 70,000 10
Find the best alternative based on the ROR method of comparison. If Company’s MARR
is 10% which alternative is best.

17. A piece of land can be purchased for Rs 60, 00,000 now, which is expected to be
worth Rs 90, 00,000 within 5 years. During that period it can be rented for Rs 2, 50,000
per year. Annual taxes are known to be a constant at Rs 8500.Compute the rate of
return.

18. A firm has identified three mutually exclusive investment proposals whose details
are given below. The life of all the three alternatives is 5 years with negligible salvage
value. If the MARR is 13%, find the best alternative based on rate of return method of
comparison.
Particulars Project A Project B Project A
Investment (Rs) 1,50,000 2,10,000 2,55,000
Net income/Year 45,570 58,260 69,000

19. An investor has an opportunity to purchase a commercial rental property for

Rs 3, 00,000.The current occupants have signed a 10 year lease at a constant annual
rate of Rs 48,000 and maintenance costs and taxes on the structure are currently Rs
12,000 and are expected to increase at a rate of Rs 1500 per year over the 10 years
period. Assuming that the property can be sold for at least the purchase price when the
current lease expaires. Determine the investor’s MARR?

20. A company is considering the purchase of a new piece of testing equipment that is
expected to produce Rs.8000 additional profit during the first year of operation. This
amount will probably decrease by Rs.500 per year for each additional year of ownership.
The equipment costs Rs.20, 000 and will have an estimated salvage value of Rs.3000
after 8 years of use. How does the proposal match up against a MARR of 18% pa?

UNIT-4
1.Define depreciation. Discuss the reasons for depreciation.

2. List any four methods of computing depreciation. Elaborate on any two.

3. Elaborate on declining balance and sinking fund method of depreciation computation.

4.With neat sketch, explain Profit-Volume (P-V) Chart

5. Discuss various methods for lowering the break-even point.

6.A company has purchased an equipment whose first cost is Rs 20,00,000/- with an
estimated life of 10 years. The estimated salvage value of the equipment at the end of
its lifetime is Rs 4,00,000/-. Determine the depreciation charge and book value at the
end of various years using the straight line method of depreciation.

7.An equipment was purchased for Rs 4,00,000 and Rs20,000/-were spent for erection
and commissioning. The estimated residual value after 10 years was Rs 20,000.
Calculate the following using straight line depreciation method:

i. The annual rate of depreciation.

ii. Book value of the equipment at the end of each year and plot graph of No.of years
v/s depreciation fund.
iii. The depreciation fund collected at the end of the 8th year.

8.A company has purchased an equipment whose first cost is ₹.100,000/- with an
estimated life of 8 years. The estimated salvage value of the equipment at the end of its
lifetime is ₹.20,000/-. Determine the depreciation charge and book value at the end of
various years using the declining balance method of depreciation.

9.Luminous 3 kw off grid solar system for commercial complex was purchased for ₹.1,
00,000/- on 1st January 1990. The erection and installation work cost is ₹.10, 000/- . The
solar equipment was replaced by a new one on 31st December 2010. If the scrap value
was estimated ₹.15, 000/- at the end of the service life. What could be the depreciable
amount in depreciation fund on 15th January 1998? If after 10 years of running, some
parts of an solar equipment are replaced and replacement cost is ₹.5,000/-.What will be
the new rate of depreciation. Solve this problem using straight line depreciation method.
10.A company has purchased an equipment whose first cost is Rs 20,00,000/- with an
estimated life of 10 years. The estimated salvage value of the equipment at the end of
its lifetime is Rs 5, 00,000. Determine the depreciation charge and book value for the
10 years using the sum of years digits method of depreciation.

11.A company has purchased an equipment whose first cost is Rs 10,00,000/- with an
estimated life of 5 years. The estimated salvage value of the equipment at the end of its
lifetime is Rs 2,00,000/-. Calculate the depreciation charge and prepare a table to show
book value at the end of various years using sinking fund method of depreciation with
an interest rate of 12% compounded annually

12. A plant has a monthly sales income of Rs 1, 00,000 and is producing two products,
the details of which is as follows.
Description Product A Product B
Fixed cost (Rs) 16,000 34,000
BEP (Rs) 43,000 35,000
Profit (Rs) 8,000 3,000
In view of the high fixed cost and the loss incurred by the product B, it was suggested
to management that the product B should be eliminated and production should be
concentrated on product A. Analyze the situation and comment on this suggestion.

13.The break even point of a product occurs at at a sales income of Rs 1,20,000 but
normally tha sales income is Rs 1,80,000.The fixed cost being Rs 1,00,000. A new
product involved additional cost of Rs 20,000, but PV ratio was improved by 20% and
sales income increased to Rs 2,40,000.What net profit did the new design yield.

13. A firm manufacturing some crokery products shows the following data with the help
of a PV chart .Calculate the BEP and PV ratio for each item.Also find the equivalent BEP
and PV ratio.
Items Fixed costs Monthly Sales (Rs) Profit/Loss (Rs)
(Rs)
Vases 25,000 60,000 15,000
Soap 30,000 48,000 5000 Loss
Bowls
Tea cups 45,000 78,000 7000

14. A company is dealing with manufacture of nuts and bolts.The fixed costs of the
company is Rs 2,00,000 and variable costs are 50% of sales.
(a) What sales are required to show a profit of Rs 25,000
(b)What profit should be earned from sales of Rs 5,00,000
( c) What sales must be achived at the BEP.

15. A company incurs expenditure of fixed costs of Rs 16,000 and needs a profit Rs Rs
2,000.Its annual sales income is Rs 36,000.If the the selling price is Rs 8 per unit , find
the production cost per uint and BEQ. Also calculate the profit if the sales income
increases to Rs 50,000.

16.A company produces and sales 100 units per month at Rs 20 each. Variable costs
per unit is Rs 12 and fixed cost is Rs 300 per month. It is proposed to reduce sales price
by 20%. Find the additional sales required to earn the same profit as before.

17.A factory produces 300 units per month. The selling price is Rs 120 and variable csot
is Rs 80 per unit. The fixed expenses of the factory amounts to Rs 8,000 per month.
Calculate
(a) The estimated profit in amonth wherein 240 units are produced.
(b) The sales to be made to earn a profit of Rs 7000 per month.

18. From the following information find BEP and how much profit the company can
make?
Sales= Rs 20,00,000 Variable cost = Rs 12,00,000 Fixed cost = Rs 6,00,000

19. Alpha Associates has the following details:

Fixed cost • Rs. 20.00.000
Variable cost per unit — Rs. 100
Selling price per unit = Rs. 200
Find (a) The break-even sales quantity. (b) The break-even sales
(c) If the actual production quantity is 60.000. find (i) contribution; and (if) margin of
safety

20. Consider the following data of a company for the year 2022:
Sales = Rs. 80,000
Fixed cost = Rs. 15,000
Variable cost = 35,000
Compute: (a) Contribution (b) Profit (c) BEP (d) Margin of Safety

UNIT-5
1. Elaborate on the necessity of replacement of an asset.List the basic reasons for
replacement.

2. List three replacement models. Elaborate on any one model.

3.With suitable example elaborate on cost and price of a product.

4.With a neat diagram elaborate on elements of cost

5.List and elaborate on components of cost

6.Elaborate on job costing. Support your answer with suitable example.

7.Ealborate on process costing. Support your answer with suitable examples.

8.With a standard performa of cost sheet elaborate on the importance of preparing a
cost sheet.

9.The cost of a machine is Rs 10,00,000 and its scrap value is Rs 2,00,000. The
manintancence cost found from experience is as follows.

Year 1 2 3 4 5 6 7 8
Running
10,00 1500 1500 1600 1900 2500 2750 3000
cost(Rs
0 0 0 0 0 0 0 0
)
When should the machine be replaced.

10.The cost of a machine is Rs 6,00,000 and its scrap value is Rs 1,00,000. The
manintancence cost found from experience is as follows.

Year 1 2 3 4 5 6 7 8
Running
12,00 16,00 20,00
cost(Rs 5,000 5,000 7,000 9,000 9,500
0 0 0
)
When should the machine be replaced.

11.A fleet owner finds from his past experience records that the cost of a small
machine is Rs 60,000 and the running costs are given below. At what stage the
replacement is due?

Year 1 2 3 4 5 6 7 8
Running 10,00
5000 6000 6000 7000 7200 7500 9000
cost(Rs) 0
Resale value 5500 5000 4000 4000 3500 3200 2500 2000
(Rs) 0 0 0 0 0 0 0 0

12.A manufacturing firm from past experience records that the cost of the machine is
Rs 10,00,000 and the running costs are given below. At what stage the replacement is
due?

Year 1 2 3 4 5 6
 1,00,00 1,50,00 2,00,00 2,75,00 3,50,00 4,00,00
Running cost(Rs)
0 0 0 0 0 0
9,00,00 7,80,00 7,00,00 6,25,00 6,00,00 5,00,00
Resale value (Rs)
0 0 0 0 0 0

13. The cost of an asset is Rs 5000, the maintenance cost of the nth year is given by
Cn=500(n-1) where n=1,2,3…..If the interest rate is 5% per year,determine the economic
replacement interval.

14.The cost of an asset is Rs 5,00,000, the maintenance cost of the nth year is given by
Cn=75,00(n-1) where n=1, 2, 3…..If the interest rate is 10% per year,determine the
economic replacement interval.

15.A manufacturer is offered two machines A & B. A is priced at Rs 5000 and running
costs are estimated at Rs 800 at each of the first 5 years increasing by Rs 200/year in
the 6th and subsequent years, Machine B which has the same capacity as machine A
costs Rs2500 but will have running cost of Rs 1200/year for the first 6 years increasing
by Rs 200/year thereafter. If money is worth of 10%/year, which machine should be
purchased?

16. Calculate prime cost from the following information:-

Opening stock of raw material = Rs. 2,50,000
Purchased raw material = Rs. 15,00,000
Expenses incurred on raw material = Rs. 1,00,000
Closing stock of raw material = Rs. 4,50,000
Wages Rs. 9, 52,000
Direct expenses Rs. 4, 68,000

17.Compute factory cost from the following details:-

Raw material consumed = Rs 50,00,000
Direct wages = Rs20,00,000
Direct expenses = Rs 10,00,000
Factory expenses 80% of direct wages
Opening stock of work in progress = Rs 15,00,000
Closing stock of work in progress = Rs 21,00,000

18.Prepare cost sheet from the following particulars:

Raw material purchased Rs. 2,40,000 Paid freight charges Rs 20,000
Wages paid to laborers Rs 70,000 Directly chargeable expenses Rs 50,000
Factory on cost =20% of prime cost
General and administrative expenses 4% of factory cost
Selling and distribution expenses 5% of production cost
Profit 20% on sales
 Opening stock (Rs.) Closing stock (Rs.)

Raw material 30,000 40,000

Work in progress 35,000 48,000
Finished goods 40,000 55,000

19.Calculate (a) Cost of raw-materials consumed; (b) Total cost of production; (c) Cost
ofgoods
sold and (d) The amount of profit from the following particulars :
Particulars Amount (Rs)
Opening Stock :
Raw-materials 2,00,000
Finished goods 1,60,000
Closing Stock :
Raw-materials 1,60,000
Finished goods 2,00,000
Raw-materials-purchased 20,00,000
Wages paid to labourers 8,00,000
Chargeable expenses 80,000
Rent, rates and taxes 2,00,000
Power 96,000
Factory heating and lighting 80,000
Factory insurance 40,000
Experimental expenses 20,000

20.From the following information assess(a) Cost of raw-materials consumed; (b) Total
cost of production; (c) Cost ofgoods sold and (d) profit

Particulars Amount (Rs)

Opening Stock
Raw-materials 2,00,000
Finished goods 1,60,000
Closing Stock
Raw-materials 1,60,000
Finished goods 2,00,000
Raw-materials-purchased 20,00,000
Wages paid to labourers 8,00,000
Chargeable expenses 80,000
Rent, rates and taxes 2,00,000
Power 96,000
Factory heating and lighting 80,000
Factory insurance 40,000
Experimental expenses 20,000
Sale of wastage of material 8,000
Office management salaries 1,60,000
Office printing and stationery 8,000
Salaries of salesman 80,000
Commission of travelling agents 40,000
Sales 40,00,000