MB2D2

y Answer all 72 questions. y Marks are indicated against each question. 1. Consider the following particulars of Shalet Ltd.: Margin of safety (representing 20% of sales) P/V Ratio The break even sales of the company are (a) (b) (c) (d) (e) Rs.75,000 Rs.45,000 Rs.60,000 Rs.30,000 Rs.37,500. Rs.15,000 40%

mark (2 s)

2. Fixed cost is the product of (a) (b) (c) (d) (e) Break-even sales and margin of safety Sales and margin of safety Sales and profit-volume ratio Profit-volume ratio and break even sales Profit-volume ratio and excess of sales over break even point.

(1mark)

3. Basu Ltd., presents the following estimates pertaining to its Department A: Particulars Sales Fixed cost Variable cost Rs. 7,00,000 3,50,000 4,20,000

The value of sales to be increased by the company to reach the break even sales is (a) (b) (c) (d) (e) Rs.1,13,865 Rs.1,23,725 Rs.1,33,600 Rs.1,75,000 Rs.1,72,040.

mark (2 s)
<Answer>

4. Vaishali Ltd. has furnished the following data pertaining to its business: Variable cost Fixed overhead Normal production Actual production Sales Sale price Rs.38 per unit Rs. 8 per unit 15,000 units 12,000 units 10,000 units Rs.60 per unit

The value of ending inventory using Absorption costing is (a) (b) (c) (d) (e) Rs.92,000 Rs.96,000 Rs.66,000 Rs.76,000 Rs.67,000.

mark (2 s) mark (2 s)

5. Sakshi Technologies Ltd. furnishes the following information pertaining to its product for last two years:

Year 2006-07 2007-08

Sales (Rs.) 1,20,000 1,30,000

Profit (Rs.) 13,000 15,000

If the company wants to earn a profit of Rs.55,000, desired sales would be (a) (b) (c) (d) (e) Rs.3,30,000 Rs.4,50,000 Rs.4,76,667 Rs.5,07,692 Rs.2,75,000.

6. Bakshi Ltd. has furnished the following data for the month of September 2008: Particulars Sales Fixed expenses Direct materials Direct labour Direct expenses The Margin of safety of the company is (a) (b) (c) (d) (e) Rs.1,20,000 Rs.1,85,000 Rs.1,00,000 Rs.1,35,000 Rs.1,80,000. Rs. 3,00,000 90,000 95,000 35,000 35,000

mark (2 s)

7. Vinayaka Ltd. furnishes the following information for a period, pertaining to its product T: Cost of production (for 11,000 units) Selling expenses (per unit) Sales (for 9,000 units) The profit per unit of the product was (a) (b) (c) (d) (e) Rs.1.15 Rs.1.20 Rs.2.60 Rs.1.60 Rs.1.25. Rs.44,000 Re. 0.40 Rs.54,000

mark (2 s)

8. Vijay Ltd. has furnished the following cost data for 600 units (which is its 50% capacity) of its product: Variable overhead costs Fixed overhead costs The total cost for 950 units is (a) (b) (c) (d) (e) Rs.7,00,000 Rs.6,50,000 Rs.6,00,000 Rs.9,75,000 Rs.5,00,000. Rs.3,00,000 Rs.5,00,000

mark (2 s)

9. Which of the following is true with respect to target costing? (a) (b) (c) It is a method of price skimming It is used to develop a short run price It is a method of penetration pricing

(1mark)

(d) (e)

It is a process where the cost of the product is determined and then an appropriate price is chosen It is the manufacturing cost for a product which is arrived at by subtracting the acceptable profit margin from the expected market price.

10 Which of the following factors is to be multiplied with contribution margin ratio to calculate . profit? (a) (b) (c) (d) (e) Unit contribution margin Margin of safety Variable costs per unit Unit sales price Change in sales volume.

(1mark)

11 The current sales price of product of Teddy Ltd. is Rs.180 per unit. Variable costs are expected . to increase from Rs.140 to Rs.150 per unit. Fixed costs of Rs.6,00,000 will not change. The number of additional sales units required in order to maintain the existing operating income of Rs.7,20,000 is (a) (b) (c) (d) (e) 10,000 units 8,800 units 8,000 units 11,000 units 2,800 units.

mark (2 s)

12 The operating results of M/s. Swastik Steels Ltd. for the year 2007-08 were as follows: . Product Sales Mix (%) PV Ratio (%) A 34 16 B 22 6 C 44 13 Total sales value of all the products was Rs.550 lakh and fixed costs amounted to Rs.18 lakh. The composite Profit-Volume ratio of the company was (a) (b) (c) (d) (e) 12.48% 14.75% 15.20% 11.25% 10.75%.

mark (2 s)

13 Khullar Appliances Ltd. has provided the following information for its product for a period: . Particulars Rs. Direct materials 65,200 Direct wages 53,300 Direct expenses 56,500 Manufacturing overhead costs 37,200 Administrative overhead costs 27,600 The prime cost of the product was (a) (b) (c) (d) (e) Rs.1,18,500 Rs.1,55,700 Rs.1,75,000 Rs.2,12,200 Rs.2,58,500.

mark (2 s)

14 If the activity level is increased from 70% to 78%, the fixed cost . (a) Will reduce by 8% (b) Will increase by 8%

(1mark)

(c) (d) (e)

Per unit will increase by 8% Per unit will reduce by 8% Per unit will reduce.

15 Banta Ltd. manufactures product KDM for last ten years. The company maintains a margin of . safety of 36% with an overall contribution to sales ratio of 35%. If fixed cost is Rs.8.4 lakh, the profit of the company is (a) (b) (c) (d) (e) Rs. 11.400 lakh Rs. 24.000 lakh Rs. 4.725 lakh Rs. 37.500 lakh Rs. 8.644 lakh.

mark (2 s)

16 The following is an excerpt from the income statement of Sai Ltd. for a period: . Particulars Rs. Sales 1,00,000 Provision for tax 4,000 Interest on bank overdraft 2,000 Operating expenses 60,000 Excise duty 5,000 Value added by manufacturing is (a) Rs.39,000 (b) Rs.35,000 (c) Rs.33,000 (d) Rs.29,000 mark (e) Rs.57,000. (2 s) 17 Which of the following statements is false in respect of full cost pricing and contribution . margin pricing? (a) (b) (c) (d) (e) These cannot be considered as competing with each other In both the methods, the selling prices proposed must be only tentative and they are alway subject to adjustments Fixed costs are important in both the pricing models In both the methods, a normal mark-up on total costs is made and the volume of productio taken into consideration They represent to a certain degree, cost plus pricing. (1mark)

18 Bill James Ltd. manufactures 1,200 units of product PC during the year 2007-08. The variable . cost per unit and fixed costs per annum are Rs.35 and Rs.45,000 respectively. If the company expects an annual profit of Rs.30,000, the mark-up percentage on variable cost is (a) (b) (c) (d) (e) 107.14% 178.57% 278.57% 171.43% 207.14%.

(2

mark s)

19 Hansley Ltd. has furnished the following data for the month of September 2008: . Particulars Rs. Sales 2,75,000 Fixed expenses 61,671 Direct materials 97,600 Direct labour 79,450 Direct expenses 14,075 The Profit-Volume ratio of the company is (a) 45.52% (2 mark s)

(b) (c) (d) (e)

33.33% 30.50% 25.00% 35.05%.

20 If the sales of Precious Ltd. for two consecutive years were Rs.64,000 and Rs.72,000 . respectively and profits for the same years were Rs.8,000 and Rs.11,200 respectively, the fixed cost of the company was (a) (b) (c) (d) (e) Rs.68,000 Rs.65,000 Rs.50,000 Rs.17,600 Rs.40,000.

(2

mark s)

21 Under Subtractive Approach, which of the following items is not deducted from the sales . revenue for computation of value added? (a) (b) (c) (d) (e) Raw materials Bought-in components Wages and salaries Consumable stores Repairs and maintenance of plant and machinery.

(1mark)

22 If a company desires to earn a profit of 25% on selling price, the profit mark-up on cost . should be (a) (b) (c) (d) (e) 20.00% 33.33% 75.00% 30.00% 50.00%.

(1mark)
<Answer>

23 Richies Ltd. currently operates at 60% capacity level. The normal capacity is 3,00,000 units. . The variable cost per unit is Rs.33 and the total fixed costs are Rs.18,60,000. If the company desires to earn a profit of Rs.3,00,000, the sale price of the product per unit is (a) (b) (c) (d) (e) Rs.28.92 Rs.32.40 Rs.45.00 Rs.20.40 Rs.47.17.

(1mark)

24 Cute Toys Ltd. produces and sells 50,000 toys at Rs.20 each with a profit of Rs.5 each. The . company has furnished the following cost structure per unit for its product for the year 200809: Particulars Direct material & labor costs Works overhead Sales expenses Rs. 8 5 (50% fixed) 2 (25% variable)

The direct material & labor costs are likely to increase by 35% during the next financial year. There will not be any change in the selling price and other costs. The company receives an offer to supply additional 20,000 toys. The contribution for additional 20,000 toys will be (a) (b) (c) (d) (e) Rs.4,00,000 Rs.2,00,000 Rs.2,50,000 Rs.2,76,000 Rs.1,24,000.

(2

mark s)

25 A profit making firm can increase its return on investment by . (a) Increasing sales revenue and operating expenses by the same amount in rupees (b) Increasing investment and operating expenses by the same amount in rupees (c) Decreasing sales revenue and operating expenses by the same percentage (d) Increasing sales revenue and operating expenses by the same percentage (e) Decreasing investment and sales by the same percentage. (1mark) 26 Which of the following statements is false? . (a) Under full cost pricing, the normal mark-up is based on sales value (b) Full cost pricing is designed to recover both fixed costs and variable costs (c) Under full cost pricing, sellers do not take advantage of buyers when latters demand beco acute (d) Pricing decisions may be influenced by internal factors such as cost and profit objectives (e) Contribution margin approach to pricing is concerned with cost, volume and profit. (1mark) 27 Notional rent charged on business premises owned by the proprietor is an example of . (a) Programmed cost (b) Replacement cost (c) Imputed cost (d) Committed cost (e) Discretionary cost. (1mark) 28 Which of the following statements is false with regard to value added? . (a) Gross value added is derived by deducting depreciation from the net value added (b) Value added is the most relevant concept of the social responsibility concept of the enterpr (c) Value added statements reflect the broader view of the companys objectives and responsibilities (d) It measures the value of increase in resources (e) Additive approach and subtractive approach are the approaches for computing value addedmark) (1 29 In a decision analysis situation, which of the following costs is generally not relevant? . (a) Incremental cost (b) Differential cost (c) Replacement cost (d) Avoidable cost (e) Historical cost. (1mark) 30 While computing the profits of a business, which of the following measures considers the cost . of debt as well as the cost of equity? (a) (b) (c) (d) (e) Gross value added Net value added Economic value added Market value added Brand value added.

(1mark)

31 Which of the following is a period cost? . (a) Research and development costs (b) Direct labor cost (c) Repair cost (d) Indirect material cost (e) Power cost. 32 Saurav Ltd. has furnished the following data for the month of September 2008: . Particulars Rs. Sales price per unit 24

(1mark)

(2

mark s)

Variable manufacturing cost per unit Variable selling cost per unit Fixed factory overhead per annum Fixed selling costs per annum

12 4 6,48,000 3,02,400

The number of units to be sold by the company at break-even point was (a) (b) (c) (d) (e) 1,18,800 units 90,000 units 88,000 units 84,000 units 60,000 units.

33 All of the following are major considerations in fixing a selling price except . (a) Competitors price (b) Unique product features (c) Price of substitutes (d) Product costs which set a ceiling to the price (e) Capturing market share. (1mark) 34 The term relevant cost applies to all the following decisional situations, except . (a) Determination of a product price (b) Replacement of equipment (c) Deletion of a product line (d) Manufacture or purchase of component parts (e) Acceptance of a special order. (1mark) 35 Which of the following costs is a semi variable cost? . (a) Depreciation on machinery (b) Factory rent (c) Supplies and other indirect materials (d) Maintenance of machinery (e) Advertising. (1mark) 36 Target costing is based on the following premises, except . (a) Orienting products to customer affordability (b) Orienting products to market driven pricing (c) Treating product cost as an independent variable during the definition of a products requirements (d) Proactively working to achieve target cost during product and process development (e) Treating product cost as a dependent variable during the definition of a products requirem (1mark) 37 Which of the following items would be treated as an indirect cost in manufacture of a chair? . (a) Wood used to make a chair (b) Metal used for the legs of a chair (c) Fabric to cover the seat of a chair (d) Staples to fix the fabric to the seat of a chair (e) Leather used for making handles of a chair. (1mark) 38 During the year 2006-07, Metro Ltd., produced 14,500 units with the total cost of Rs.2,68,100. . In the year 2007-08 it increased its production to 16,000 units. The total cost of production has been increased by Rs.19,200 from the total cost of 2006-07. The variable cost per unit during the year 2007-08 was (a) (b) (c) Rs.10.20 Rs.12.20 Rs.11.80

(1mark)

(d) (e)

Rs.12.80 Rs.10.80.

39 Which of the following statements is true? . (a) Marginal costing and absorption costing are the same (b) In marginal costing technique, profit is the difference between sales and marginal cost (c) If marginal costing technique is used, only variable costs are charged to products (d) In marginal costing, under or over absorption of fixed overheads is bound to arise (e) In marginal costing technique, a portion of fixed overheads is carried over to the next peri mark) (1 40 Mirind Ltd. has furnished the following information pertaining to its production: . Normal capacity 80,000 units Increase in inventory 3,650 units Variable cost per unit Rs.18 Selling price per unit Rs.50 Fixed manufacturing overhead costs Rs.9,60,000 If the profit under Absorption costing method is Rs.88,200, the profit under Marginal costing method would be (a) (b) (c) (d) (e) Rs. 53,160 Rs. 44,400 Rs.1,32,000 Rs.1,23,240 Rs. 35,040.

(2

mark s)

41 Which of the following costs is not considered as a product cost under Absorption costing as . well as Direct costing? (a) (b) (c) (d) (e) Freight-in Direct labor cost Insurance of factory Manufacturing supplies Shipping cost.

(1mark) 42 Full-cost price is defined as . (a) The price usually based on absorption costing (b) The price usually based on marginal costing (c) The price in the open market (d) The price representing the cash outflows of the supplying division plus the contribution to supplying division from an outside sale (e) The price based on variable cost plus a lump sum. (1mark) 43 The opportunity cost of making a component in a factory with no excess capacity is the . (a) Variable manufacturing cost of the component (b) Cost of production given up in order to manufacture the component (c) Net benefit given up from the best alternative use of the capacity (d) Total manufacturing cost of the component (e) Fixed manufacturing cost of the component. (1mark) 44 Which of the following is false with regard to Economic Value Added (EVA)? . (a) The computation of EVA involves a complex procedure (b) EVA can be improved by downsizing profitable operations (c) EVA is a residual income measure that subtracts the cost of capital from the operating prof generated by a business (d) EVA can be used for making day-to-day decisions as well as for strategic planning (e) EVA is one variation of residual income with adjustments in the method of calculation. (1mark)

45 Which of the following is true if the decision for establishment of branch sales office is . chosen in comparison with employing selling agents? (a) (b) (c) (d) (e) Only variable cost is higher Both fixed costs and variable costs are higher The level of variable cost is more and fixed cost is less The level of variable cost is less and fixed cost is more The levels of both variable costs and fixed costs are less.

(1mark)

46 Market Value Added is the difference between . (a) Market value of invested capital and Net value added (b) Net value added and Economic value added (c) Book value of invested capital and Economic value added (d) Market value of invested capital and Gross value added (e) Market value of invested capital and Book value of invested capital. (1mark) 47 Varoon Ltd. has received an order for the supply of 2,00,000 units of its product Y. There is . enough capacity available but additional balancing equipment have to be purchased for Rs.80,000. The total costs of manufacturing the product will be Rs.5,47,940. Working capital required will be 50% of the sales value. If the company expects a return of 20% on the additional capital requirement for the order, the price of the order should be (a) (b) (c) (d) (e) Rs.2,29,560 Rs.3,72,140 Rs.6,26,600 Rs.7,89,995 Rs.8,01,234.

(2

mark s)

48 Maniyar Ltd. has furnished the following data relating to its product for the year 2007-08: . Units produced 2,250 Direct material costs (Rs.) 4,05,000 Direct labor costs (Rs.) 3,15,000 Manufacturing overhead costs (Rs.) 1,20,000 (25% fixed) Selling and administrative costs (Rs.) 1,50,000 (40% fixed) The variable cost per unit was (a) (b) (c) (d) (e) Rs.520 Rs.460 Rs.400 Rs.420 Rs.440.

(2

mark s)

49 Consider the following data of Surabhi Ltd. for the year 2007-08: . Variable cost per unit (Rs.) 75 Fixed costs (Rs.) 12,00,000 Estimated profit (Rs.) 5,85,000 Production (Units) 10,000 The mark-up on total cost was (a) (b) (c) (d) (e) 78.00% 48.75% 40.00% 30.00% 25.00%.

(2

mark s)

50 GMV Ltd. has furnished the following data pertaining to its product for the year 2007-08: . Particulars Rs. Purchases 6,20,250 Purchase returns 23,700 Opening stock 19,200 Closing stock 16,350 Freight in 9,300 The Cost of Goods Sold for the year was (a) (b) (c) (d) (e) Rs.6,25,050 Rs.6,08,700 Rs.6,11,100 Rs.5,99,400 Rs.6,03,000.

(1mark)

51 Sathya Ltd. has furnished the following data : . Fixed cost Break even point Variable costs

Rs.45,000 7,500 units 60% of sales

If sales are 20% above break even point, the contribution per unit is (a) (b) (c) (d) (e) Rs.30 Rs.12 Rs. 9 Rs.15 Rs. 6.

(2

mark s)

52 Morey Ltd. has estimated the following data pertaining to its product CMC for a period: . Total sales (Rs.) 45,00,000 Fixed cost (Rs.) 7,50,000 P/V ratio 30% Margin of Safety as a percentage to total sales would be (a) (b) (c) (d) (e) 44.44% 56.92% 77.12% 25.72% 30.99%.

(2

mark s)

53 If the production of a company is equal to break even point, profit will increase by the . (a) Fixed costs per unit for each additional unit sold (b) Variable costs per unit for each additional unit sold (c) Net margin per unit for each additional unit sold (d) Gross margin per unit for each additional unit sold (e) Contribution margin per unit for each additional unit sold. 54 The following information is provided by Mawai Ltd. for the year 2007-08: . Selling price per unit Rs. 200 Fixed costs Rs.3,50,000 Margin of safety 60% of sales Variable cost per unit Rs. 70

(1mark)

(2

mark s)

It is estimated that variable costs will increase by 15% and fixed costs are expected to increase by 8% in 2008-09. If the company wants to maintain the same Profit-Volume ratio as in 200708, the selling price per unit would be (a) (b) (c) (d) (e) Rs.230 Rs.290 Rs.305 Rs.325 Rs.190.

55 The following information is furnished by Nowin Ltd.: . Particulars Contribution per unit Fixed cost Capital employed

Rs. 20 1,00,000 10,00,000

If the desired rate of return is 35% of the capital employed, the number of units to be produced and sold are (a) (b) (c) (d) (e) 36,100 units 55,000 units 17,500 units 22,500 units 18,150 units.

(2

mark s)

56 Swami Ltd. has furnished the following details: . P/V ratio Margin of safety Sales The net profit of the company is (a) (b) (c) (d) (e) Rs.12,18,750 Rs. 9,75,000 Rs. 2,15,620 Rs. 3,50,000 Rs.11,12,130.

50% 65% of sales Rs.37,50,000

(1mark)

57 Which of the following items is not included in preparation of a cost sheet? . (a) Carriage inward (b) Purchase returns (c) Sales commission (d) Interest paid (e) Depreciation on plant and machinery. (1mark) 58 Which of the following is a limitation of the absorption costing? . (a) Price based on absorption costing ensures that all costs are covered (b) It confirms accrual and matching concepts which require matching costs with revenue for particular period (c) Efficient or inefficient utilization of production resources is disclosed by indicating under over absorption of factory overheads (d) Closing stocks are valued at cost of production (i.e., fixed cost and variable cost), which m a portion of fixed cost is carried forward to the next period (e) Computation of gross profit and net profit separately is possible in income statement. (1mark) 59 Which of the following statements is true? . (1mark)

(a) (b) (c) (d) (e)

Management accounting is prepared in accordance with the Generally Accepted Accounting Principles Management accounting is mandatory for business organizations because it should be maintained as per various legal statutes The application of Management accounting cannot be extended beyond the traditional accounting system Management accounting focuses more on a company as a whole and less on the parts or segments of a company Management accounting focuses on providing information for internal users.

60 A cost that can be substantially influenced by a manager is often referred to as which of the . following? (a) (b) (c) (d) (e) Sunk cost Direct cost Opportunity cost Controllable cost Indirect cost.

(1mark) 61 A companys approach to make or buy decision . (a) Depends on whether the company is operating at or below normal volume (b) Depends on whether the company is operating at or below break even point (c) Involves an analysis of fixed costs (d) Involves an analysis of historical costs (e) Involves an analysis of avoidable costs. (1mark) 62 The term variable cost refers to . (a) All costs which are likely to respond to the amount of attention devoted to them by a spec manager (b) All costs which are associated with marketing, shipping, warehousing and billing activitie (c) All costs which do not change in total for a given period of time and relevant range but become progressively smaller on a per unit basis as volume increases (d) All manufacturing costs incurred to produce units of output (e) All costs which fluctuate in total in response to small change in the rate of utilization of capacity. (1mark) 63 Cost-volume-profit analysis is most important for the determination of . (a) Volume of operations necessary to break even (b) Margin of safety necessary to equal fixed costs (c) Sales revenue necessary to equal fixed costs (d) Relationship between revenues and costs at various levels of operations (e) Sales revenue necessary to equal total costs. (1mark) 64 For product A of Shilpa Ltd., the prime cost is Rs.20 per unit, factory overheads are 20% of . prime cost and administration overheads are 25% of Works cost. If the company desires to earn a profit of 25% on selling price, the selling price per unit of product A would be (a) (b) (c) (d) (e) Rs.40 Rs.33 Rs.90 Rs.30 Rs.24.

(2

mark s)

65 Which of the following is not an example of finance module of application of Enterprise . Resource Planning (ERP) system? (a) (b) Accounts receivable Treasury management (1mark)

(c) (d) (e)

Production planning Cost control General ledger.

66 Which of the following statements is true? . (a) All costs are controllable (b) Fixed cost per unit remains constant (c) Depreciation is an out-of-pocket cost (d) Variable cost per unit varies with the increase in the volume of output (e) An item of cost that is direct for one business may be indirect for another. 67 The following are the advantages of Enterprise Resource Planning except . (a) Flexibility to allow for customization (b) Adaptability to a changing business environment (c) Elimination of redundant data and procedural operations (d) Commitment to a single vendor (e) Reduced cycle times. 68 Which of the following methods is used for Brand Valuation of a company? . (a) Earnings Valuation Method (b) Super Profits Method (c) Normal Profit method (d) Average Profit method (e) Gross value method. 69 The accountant of Katrina Ltd. is reviewing the profitability of the companys two products Q . and R. The following is an excerpt from the income statement of the two products: Particulars Sales (Rs.) Cost of goods sold Gross profit (Rs.) Operating expenses Income before income taxes Units sold (Units) Sales price per unit Variable cost of goods sold per unit Variable operating expenses per unit If product R is discontinued, the income will be (a) (b) (c) (d) (e) Increased by Rs.900 Decreased by Rs.900 Increased by Rs.4,194 Decreased by Rs.4,194 Increased by Rs.1,368. Q 18,000 7,056 10,944 2,976 7,968 1,200 15 3.00 1.25 R 12,600 13,968 (1,368) 2,826 (4,194) 1,800 7 6.50 1.00

(1mark)

(1mark)

(1mark)

(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.)

(2

70 Preksha Ltd. has furnished the following information relating to the manufacture of its product . B: Particulars Rs. Opening stock: Raw materials 4,000 Work-in-progress 6,000 Raw materials purchased 49,000 Direct wages 20,000 mark Factory overheads 9,000 (2s)

mark s) <Answer >

Direct expenses Closing Stock: Raw materials Work-in-progress The works cost of product B is (a) (b) (c) (d) (e) Rs.50,000 Rs.89,000 Rs.90,000 Rs.49,000 Rs.88,000.

9,000 3,000 5,000

71 The following factors influence the Brand Strength of a company except . (a) Customer loyalty (b) Statutory protection (c) Brand Management by the company (d) Short term trends (e) The markets in which it operates. 72 Under which of the following cases the margin of safety decreases? . (a) Reduction in fixed cost (b) Increase in variable cost (c) Increase in the level of production or selling price or both (d) Change in the sales mix in order to increase the contribution (e) Substitute the existing unprofitable product with the profitable ones.

(1mark)

(1mark)

END OF QUESTION PAPER