CHAPTER 5-BUSINESS ARITHMETIC

CBSE BOARD QUESTIONS FROM PREVIOUS YEARS

YEAR 2019
1 Give the two forms of budgeting process. 1
Ans

2 Name any two key aspects of financial decision-making. 1

Ans

3 Why is it important for an entrepreneur to do break-even analysis? 2

Ans

4 Aditya Bearings Ltd. are the manufacturers and suppliers of ball bearings to fan 3
manufacturing companies. The company requires 900 kg of wrought iron for its production
process. The cost of placing each order is 50 and carrying cost is 100.
Calculate Economic Order Quantity.
Ans

5 Parvesh has started a restaurant in a small town by the name of ‘Spices of India’ by 6
spending 50,00,000. He invested 10,00,000 of his own and took a loan of 40,00,000 from State
Bank of India @ 6% per annum. His monthly sales revenue is 20,00,000 and monthly cost of
goods sold is 10,00,000. He pays a monthly salary of 2,00,000 to his employees. The GST rate
is 18%.
Calculate
(a) Return on Investment, and
(b) Return on Equity.
Ans

6 A hotel had varying number of guests during five weeks. The information regarding the 6
number of guests and the average weekly billing is presented in the following 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’
Ans

YEAR 2020

7 Gupta is the owner of KYC stores dealing in grocery items. He has an equity stake of 1
4,00,000 in the business. He has borrowed 6,00,000 from State Bank of India. His net profit
for the year is 1,40,000. The Return on Equity for Gupta will be 23.33%.
TRUE/FALSE
Ans

8 Gross working capital means: 1

(a) sum total of all assets.
(b) sum total of all fixed assets.

Prepared By: Dilraj Kaur-PGT Commerce 1

 (c) sum total of all current assets.
(d) current assets minus current liabilities.
Ans

9 Give the meaning of ‘Cash Conversion Cycle’. How is Cash Conversion Cycle of a trading 2
concern different from a manufacturing concern?
Ans

10 Calculate the Economic Order Quantity from the following information: 3

(a) Annual consumption – 120 units.
(b) Cost of placing and receiving an order –20
(c) Price per unit – 100
(d) Storage cost as percentage of average inventory – 12%
Ans

11 ‘Flavouright Foods Ltd.’ started a business of making nachos (corn chips) in three variants, 4
Classic Cheese, Toasted Corn and Tangy Tomato. To start with, all the three variants will be
sold in a standard packing of 100 gms each, the selling price would differ due to the
ingredients used. Fixed costs are 38,000 Sales price and variable costs per unit are as follows:

From the above information calculate:

(a) Weighted contribution margin per unit.
(b) Breakeven point – total and per product.
Ans

2022

12 Kwality Stores is famous for its woollen garments sourced from Ludhiana. Its most popular 2
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.
Ans

13 (a) Give the meaning of Cash Conversion Cycle (CCC). 3

(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:

Ans

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14 Calculate the Return on Equity (ROE) for Neerja International, for the year 2020 2021 from 3
the details given below:

Monthly Sales revenue was 10,00,000 and Cost of goods sold was 4,00,000.
Ans

YEAR 2023

15 Ramandeep is a technical entrepreneur who started developing interactive websites of 1

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

(a) (i) and (iii)

(b) (iii) and (iv)
(c) (ii) and (iii)
(d) (i) and (iv)
Ans

16 From the information given below, calculate the circulating capital of a company: 1

(a) 35,000
(b)1,65,000
(c) 2,00,000
(d)2,35,000
Ans

17 Sahiba has a boutique in Nagpur, which she started in 2020. She had invested 2,00,000 from 1
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: -
(a) 10%
(b) 20%
(c) 25%
(d) 40%
Ans
Prepared By: Dilraj Kaur-PGT Commerce 3
18 Break-Even Point is the level where: 1
(a) the revenue generated is equal to all the expenses required for generating the revenue.
(b) the revenue generated is less than all the expenses required for generating the revenue.
(c) the revenue generated is more than all the expenses required for generating the revenue.
(d) Both (a) and (b)
Ans

19 Give the meaning of cash conversion cycle. How does the nature of business influence its 3
cash conversion cycle? Explain with the help of a diagram.
Ans

20 Baked Delight Ltd. is a well-known name in breads and bakery products. It has diversified 5
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:

From the given information calculate Break-Even Point in units and rupees.
Ans

COMPARTMENT 2019
21 A speciality store sells 1000 insulated water bottles annually. Demand for the product is 3
uniform. Purchase cost is 50 per bottle. Holding cost per annum is 10% of purchase cost.
Ordering cost is 100 per order. Calculate the Economic Ordering Quantity of the bottles for
the speciality store.
Ans

22 Explain the process for developing a cash flow projection. 3

Ans

23 Mohan started his business of manufacturing leather belts and wallets in Kanpur in the 6
name of ‘Essentials’ by spending 15,00,000. He invested 8,00,000 of his own money and took
a loan of 7,00,000 from Dena Bank @ 7% per annum. His monthly sales revenue is 6,00,000
and monthly cost of goods sold is 2,50,000. He pays a monthly salary of 50,000 to his
employees. Monthly maintenance of machinery is 15,000. Electricity and miscellaneous
charges per month are 10,000. The tax rate on profit is 12%.
Calculate the following:
(a) Return on Investment
(b) Return on Equity
Ans

24 ‘Breezolit Pvt. Ltd.’ started a business of making three varieties of designer fans – Vitara, 6
Grand, Quadraflow. From the following information, calculate Breakeven point in units for
the company and state which variety is most revenue generating. Fixed costs are 15,20,000.

Prepared By: Dilraj Kaur-PGT Commerce 4

Ans

COMPARTMENT 2020

25 __________ shows expected inflows and outflows of cash. 1

Ans

26 In Fast Moving Consumer Goods Industry, the relationship between unit price and unit cost
could be 80% to 85% (Cost as a percentage of selling price).
TRUE/FALSE
Ans

27 For the calculation of break-even point for sales mix, certain assumptions are to be made. 1
Which of the following assumptions is not correct ?
(A) Sales price per unit, variable cost per unit and total fixed cost are constant.
(B) All units produced are sold.
(C) The sales mix changes within the relevant time period.
(D) All costs can be categorised as variable cost or fixed cost.
Ans

28 Jain invested 5,00,000 as his capital to start a small-scale enterprise. He took a loan of 2
2,00,000 from the bank. During the year he earned a net profit of 70,000.
Calculate Jain’s ‘Return on Investment’.
Ans

29 Mahindra Stores sells 4000 units of power banks annually. Demand for the product is 3
uniform. Purchase cost per power bank is 400. Holding cost per annum is 10% of the
purchase cost. Ordering cost is 200 per order.
Calculate the Economic Ordering Quantity for Mahindra Stores for the power banks.
Ans

30 From the following information related to sales mix of products X, Y and Z, calculate 4
breakeven point in units:
Total fixed cost is < 2,46,500.

Ans

COMPARTMENT 2022

Prepared By: Dilraj Kaur-PGT Commerce 5

31 'Gizmo Gadgets' sold a variety of 'Android Tablets' and 'Pen Tablets' during the COVID-19 2
pandemic as the schools and offices operated online.
Monthly demand for 'Android Tablets' for the year 2021 — 2022 is 150 units. Purchase
cost of each tablet is 3,600. Holding cost per annum is 10% of the purchase cost.
Ordering cost is 1,000 per order.
Calculate the Economic Order Quantity for 'Gizmo Gadgets'.
Ans

32 ABC International has two subsidiaries operating in different product lines. The 3
management desires to know which of the two subsidiaries is doing better in
comparison to the total funds that have been invested in the business. The following
information was provided about both the subsidiaries:
Subsidiary 1 : TCL Ltd.
Net Profit after tax for the year 2020 — 21 was 1,00,000. Its investment in business in
the form of shareholders' equity was worth 5,00,000.

Subsidiary 2 : JPC Ltd.

Net Profit after interest and tax was for the year 2020 — 21. Its investment in business
was shareholders' equity worth and 8% debentures of

By calculating 'ROI' identify the subsidiary that is doing better.

Ans

33 (a)Why is the operating cycle for a trading concern shorter than that of a 3
manufacturing concern? State. Also state how the length of operating cycle impacts
the working capital requirement of any business.

(b)Calculate the net working capital for XYZ Ltd. from the given information:

Ans

COMPARTMENT 2023
34 Which amongst the following options will help an entrepreneur to determine the Return of 1
equity (ROE)?
(i) Total Capital Invested
(ii) Net Income (iii) Gross Profit
(iv) Equity (owned funds)

(a) (i), (ii) and (iii)

(b) (iii) and (iv)
(c) (ii) and (iv)
(d) (i) and (iii)
Ans

35 Assertion (A): Break-even point is that level of production where there is neither loss nor 1
profit.

Prepared By: Dilraj Kaur-PGT Commerce 6

 Reason (R): Break-even point helps in determining the products that are not contributing to
meet fixed expenses.

Choose the best option from the following:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation for
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
for Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Reason (R) is true, but Assertion (A) is false.
Ans

36 A company uses 300 units of raw material per day. The order lead time is 5 days. The 1
minimum level of inventory when a new order is to be placed will be:
(a) 1500 units
(b) 1000 units
(c) 500 units
(d) 150 units
Ans

37 Why is it important for an entrepreneur to do a break-even analysis? State any two points. 2
Ans

38 What is meant by working capital? How does the cash conversion cycle impact the need for 2
working capital for any business? State
Ans

39 A factory is engaged in manufacturing cotton yarn of three qualities, i.e., A grade, B grade 3
and C grade. From the details given below, compute the break; even level for each grade of
cotton yarn.

Ans

40 Calculate the Return on Investment for Singh, the owner of Hawara Sugar Mills for the year 5
ending 2022 2023 from the data given below:

Singh invested 20 lakhs out of which 8 lakh was owned funds of Singh and rest was
borrowed from IDBI Bank @ 10% p.a. Tax rate applicable for the year was 20%.
Ans

SAMPLE QP-2014-15
41 A stationery shop sells - 30,000 pens per year. Purchase cost is Rs. 2 per pen; Holding cost is 3
– 20% of the purchase cost; Ordering cost is Rs.15. Calculate the EOQ from the following
details for the stationery shop.
Ans
Prepared By: Dilraj Kaur-PGT Commerce 7
42 A grocery store sold in a day different quantity for different products at the prices indicated 4
against them:

The shopkeeper also found out, based on the number of bills issued by him, that there were
50 customers. If customer is the unit of sale, what is the ‘Unit Price’ in the above case? If the
cost of each grocery item is 75% of its selling price, calculate the ‘Unit Cost’ and the ’Gross
Margin’ per unit of sale.
Ans

43 The United company manufactures three products – Lipsticks; Eyeliners; Nail paints. The 6
variable expenses and sales prices of all these products are given below:

The total fixed expenses of the company are `50,000 per month. For the coming month, it
expects the sale of three products in the following ratio: ProductX:20%; ProductY:50%;
Product Z: 70%
Compute the break-even point of company in units and rupees for the coming month.
Ans

SAMPLE QP-2015-16

44 Aditi started a beauty Parlor business. She spend Rs.30,00,000/- to open the Parlor of which 3
she invested 14,00,000/- of her own money and borrowed a loan for 16,00,000/-. Interest
rate per annum is 14%. Sales revenue per month is 1,60,000/-. Cost of goods sold is 60,000/-
per month. Fixed expenses for that month is 60,000/- (salary 40,000/-, rent and utility
20,000/-), depreciation 30,000/- and tax @ 15%.
Ans

45 Ms. Rosy is a readymade garments manufacturer. Her Annual Usage rate is 225Pcs. The cost
of placing each order is Rs.8/- and the carrying cost is Rs.4 per unit. Calculate the Economic
Order Quantity (EOQ). How does calculating EOQ facilitate budgeting?
Ans

46 Ram was very thrilled with his new job. He was placed in a small factory manufacturing 3
door knob as a stock keeper. After a few days, while taking stock he understood that nuts
and various small parts constituted majority of the cost of production. After some time, the
firm went into a loss and the owner decided to look into the various factors that could have
constituted the loss. Ram expressed his concern that inventory was not properly maintained
and that there are various techniques which are involved and if followed properly the
company will not be in a loss. The owner agreed to the suggestion. He also decided to take
help from some specialized government institution initiate steps for technological up
gradation, and modernization of existing units.
a. What technique was suggested by Ram? Explain it.

Prepared By: Dilraj Kaur-PGT Commerce 8

 b. Which specialized financial institution is the owner thinking of approaching and state any
one of its objectives?
Ans

47 The School Gear Ltd. manufactures three products – Tiffin covers; Bottle covers; Pencil
pouch. The variable expenses and sales prices of all these products are given below:

The total fixed expenses of the company are Rs.55, 000 per month. For the coming month, it
expects the sale of three products in the following proportions: Tiffin covers: 20% Bottle
covers: 50% Pencil pouch: 30% Compute the break-even point of company in units and
rupees for the coming month.
Ans

SAMPLE QP-2016-17

48 Name the two things that are taken care in a reorder point? 1
Ans

49 You have started a beauty parlor business. You spent 5,00,000 to open the parlor of which 3
you invested 3,00,000/- of your own money and borrowed a loan for 2,00,000. Interest rate
per annum is 4%. Sales revenue per month is 35,000. Cost of goods sold is 10 ,000 per month.
Fixed expenses per month is 15,000 (salary 7,000, rent and utility 8,000), depreciation 1,000/-
and tax @ 8%.
Calculate the Return on Equity.
Ans

50 What is meant by break-even point? State any two assumptions of calculating break-even 6
point for sales mix. Calculate the break-even point in units and in rupees for the following:

Total Fixed cost ---- 50,000

Ans

SAMPLE QP-2017-18

51 Differentiate between capital budget and cash budget. 1

Ans

52 Following are the balances of current assets and current liabilities of X ltd., Cash – Rs.20,000; 3
outstanding expenses- Rs.5000; Creditors- Rs.15,000; Debtors-Rs.50,000; Short term loans-
Rs.4000; Short term investments-Rs.30,000; Long term loansRs.1,00,000; Stock-Rs.70,000.
Calculate the gross and net working capital of X Ltd.,
Ans

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53 Why is Break-even analysis regarded as a useful element of financial plan? 4
Ans

54 Best Electronics Ltd., are the manufacturers of ‘Air Conditioners’ and ‘Air Purifiers’. Their 6
fixed costs are Rs.32,00,000 per year. The sales price and variable cost per unit of ‘Air
conditioners’ and ‘Air purifiers’ are given below:

During the year the company could sell 1000 Air conditioners and 1500 Air purifiers and
could not break even. The Air conditioners and Air purifiers were sold in the proportion of
2:3 throughout the year.
Calculate break even in units as well as in rupees.
Ans

SAMPLE QP-2018-19

55 Name the two factors on which the accuracy of Cash Flow Projections depends upon. 1
Ans

56 Iqbal runs an electrical shop in Lucknow. The most sold product in his shop is ceiling fans. 3
The annual demand for fans is 32,000. The annual holding cost per unit is Rs.192. The cost
incurred in placing an order is Rs.3000. Calculate the Economic Ordering Quantity of
Ceiling fans.
Ans

57 The following figures are extracted from the balance sheet of Swadesha Ltd. 3
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 Equity for Swadesha Ltd.
Ans

58 Writing Instruments Ltd. is engaged in manufacturing and distribution of Ballpoint Pen, 6

Sketch Pen and Gel Pen.

The total fixed cost is Rs.75,000 per month. For the coming month, it expects the sale of three
products in the ratio – 2:1:2. Compute the break-even point of the company in Rupees for
the coming month.
Ans

SAMPLE QP-2019-20

59 After assuming the future demand, every company needs to determine when to place an 1
order for stock and how much to order. This can be calculated by using the
_______________formula.
Ans

Prepared By: Dilraj Kaur-PGT Commerce 10

60 Gross profit per unit is calculated by using the formula__________________ 1
Ans
61 From the following information obtained from the financial statements of Bites Ltd., 2
calculate Return on Equity. Net Income earned - ₹ 10,00,000 Equity- ₹ 5,00,000
Ans Return on Equity= Net Income/Equity × 100 = 10,00,000/5,00,000 × 100 = 200 %

62 Pink & Blue Stores sells 1000 insulated water bottles annually. Demand for the product is 3
uniform. Purchase Cost per bottle is Rs.50. Holding cost per annum is 10% of purchase cost.
Ordering cost is Rs. 100 per order.
Calculate the Economic Ordering Quantity for bottles?
Ans Economic Ordering Quantity =√2𝑃𝐷/𝐶 Thus as : annual demand (D) = 1000 bottles. Order
cost (P) = Rs. 100 Annual carrying cost of 1 unit (C/i) = 10% X 50= Rs.5 EOQ = √2 × 1000 ×
100/5 = 200 units.

63 CleAir Pvt. ltd. started a business of making three varieties of portable air purifiers for
vehicles - Vincent, Banish, Exclusive. From the following information calculate Breakeven
point in units for the company and suggest which variety is most revenue generating. Fixed
costs are Rs. 15,20,000.

Ans

Weighted Contribution= 200+60+120= Rs.380

BEP = Fixed cost/WACM = 1520000/380= 4000 units

In Units:
Vincent = 50% of 4000 = 2000 unit
Banish = 20% of 4000 = 800 unit
Exclusive = 30% of 4000 = 1200 units.
In Rupees:
Vincent = 2000 units x 800 = Rs.1600000
Banish = 800 units x 450 = Rs. 360000
Exclusive = 1200 units X 600 = Rs. 720000
The company is earning more revenue in the sale of Vincent

SAMPLE QP-2020-21

64 When total current assets exceed total current liabilities, it refers to. 1
Prepared By: Dilraj Kaur-PGT Commerce 11
 A. Gross Working Capital
B. Temporary Working Capital
C. Both A and B
D. Net Working Capital
Ans D. Net working Capital

65 Gross margin and gross profit are one and the same. Is the given statement ‘True’ or ‘False’? 1
Ans True

66 Harshdeep is the stock keeper of Neha Textiles Ltd. The company is into converting cotton 1
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?
A. By calculating Break-even point
B. By calculating Re-order point
C. By calculating Economic order quantity
D. By calculating lead time
Ans B. By calculating Re-order point

67 MM ltd. is a renowned name in manufacturing hand puppets for children. Its two most
selling varieties are Alphabets and Domestic animals. The fixed expenses of MM Ltd.in the
manufacturing of these two varieties is Rs. 75,000.

The weighted contribution for the two products will be A. Rs.70 B. Rs. 170 C. Rs. 130 D. Rs.
102
Ans C. Rs. 130

68 In a subsidiary of Sugar mill in U.P, cane juice is converted into organic jaggery. The mill
owner wants to know whether to continue with this subsidiary or close it down. On an
average, the monthly output of the subsidiary is 2,500 Kg., Sales price / kg- Rs. 100, Variable
cost/ kg- Rs.30, Fixed expenses- Rs. 70,000. The breakeven point in units will be?

A. 1000 units
B. 1500 units
C. 10000 units
D. 7500 units
Ans A.1000 units

69 A firm has Capital of Rs. 10,00,000; Sales of Rs. 5,00,000; Gross Profit of Rs. 2,00,000 and
Expenses of Rs. 1,00,000. Return on investment for the firm will be?
A.50%
B.20%
C.10%
D.30%
Ans C-10%

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70 A firm has Capital of Rs. 10,00,000 of which Rs. 6,00,000 is debt fund; Sales of Rs. 5,00,000;
Gross Profit of Rs. 2,00,000 and Expenses of Rs. 1,00,000. Return on Equity for the firm will
be?
A.50%
B.25%
C.150%
D.30%
Ans B-25%

71 Break even analysis has a major impact on the business decision making. Comment. 3
1. It helps in setting profit goal and sales target.
2. In a manufacturing environment, it helps in determining the products that are not
contributing to meet the fixed expenses and thus brings up the item for discussion in
management meetings about its continuity.
3. Breakeven point is the level of sales (or revenue generated) that equals all the expenses
required for generating that revenue. There is neither loss nor profit. It helps the
organisation to determine the level when will it turn profitable.
Ans
72 Number of people who took their meals and the total billing for each of the 5 weeks is in the 4
following table.

Based on the given information, answer the questions given below:

a. Calculate the Unit Price
b. If the variable cost is 60% of the sale price, the Gross Margin per Unit of Sale.
Ans

a.Unit Price= Total Billed Amount/ No. of Customers = 79800/420 = Rs. 190
b. Unit Price= Rs. 190 Variable Cost= 60% of Unit Price, so Gross Margin is 40% of Unit
Price. 40% X 190 = Rs. 76

SAMPLE QP-2021-22-TERM 1

73 Moon Pharma Ltd. manufactures face masks and face shield, amidst the COVID 19
pandemic. The total fixed cost of entire operations is Rs. 1,40,000.

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 The Break-even quantity for face masks will be ________________.
a. 4,000 pieces
b. 6,000 pieces
c. 10,000 pieces
d. 1,00,000 pieces
Ans b. 6,000 pieces

74 Mota Ram runs a small business specialising in delivering organic fruits and Vegetables to
the local area. He buys from local farms and packages these in boxes and delivers them
locally. Total fixed cost incurred in the entire operation is Rs. 1,00,000. What will be the
Total Break Even Point for Mota Ram?

a. 100 boxes
b. 1000 boxes
c. 10,000 boxes
d. 1,00,000 boxes
Ans b. 1000 boxes

75 Aloma Ayurvedic Limited is a well-established name in the market for ayurvedic medicine.
It has entered into the market of immunity booster drinks and has introduced Immunity
Shots in special packaging, in two flavours. Total fixed cost incurred in the entire operation
is Rs. 5,60,000. Based on the Break-even point analysis, will it be economically viable for
Aloma Ayurvedic Limited to continue with the production of these immunity shots?

a. Yes, as there is a big market for immunity boosting products.

b. No, because there is a limited variety of immunity boosting shots being introduced by the
company.
c. No, because the breakeven point is very greater than the combined sale of the two
varieties
d. Yes, because the breakeven point is smaller than the combined sale of the two varieties.

Prepared By: Dilraj Kaur-PGT Commerce 14

Ans c. No, because the breakeven point is very greater than the combined sale of the two
varieties

76 Nonika Ltd. manufactures two types of calculators, Basic Model and Scientific Calculators.
The total fixed cost of entire operations is Rs. 1,40,000.

The weighted average contribution will be ________________.

a. Rs. 650
b. Rs. 455
c. Rs. 195
d. Rs. 560
Ans a. Rs. 650

77 Match the following

a. 1 - iii, 2 - iv, 3 - ii, 4 - i

b. 1 - iii, 2 - ii, 3 - iv, 4 - i
c. 1 - ii, 2 - iii, 3 - i, 4 - iv
d. 1 - iv, 2 - iii, 3 - ii, 4 – i
Ans a. 1 - iii, 2 - iv, 3 - ii, 4 – i

78 Calculation of Breakeven Point is useful for the entrepreneur as it helps in assessing:

a. The maximum level of output to be produced.
b. The effect of change in quantity of input upon the production.
c. The cost price of the product.
d. The profitable options in line of production.
Ans d. The profitable options in line of production.

SAMPLE QP-2021-22-TERM 2

79 The annual quantity of Jackets sold by Meghana Wool Mart is 12,000 at the rate of Rs. 1000/- 2
per jacket. The cost of placing an order and receiving goods is Rs.500/- per order. Inventory
holding cost is Rs. 300/- per annum.
What is the Economic Order Quantity for Meghana Wool Mart?
Ans 200 Jackets

80 Calculate the Return on Equity (ROE)for Malti International Limited manufacturing pre mix
for instant shakes and smoothies from the details given below
● Investment- Rs. 10,00,000/-
● Borrowed Funds- Rs.6,00,000/-

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 ● Interest rate per annum is 10%.
● Monthly sales revenue is Rs. 6,00,000/- and Cost of goods sold is Rs.3,00,000/-.
● Fixed expenses per month Rs. 2,00,000/- (salary Rs.1,50,000/-, rent and utility Rs.50,000/-)
● Depreciation Rs.10,000/-
● Tax @ 20%.
If Malti international Limited wishes to know how their own money is being used, which
parameter for performance evaluation, ROE or ROI, should be used?

Ans

SAMPLE QP-2022-23

81 Which amongst the following values would help an entrepreneur to determine the Return 1
on Investment?
1. Net Profit
2. Gross Profit
3. Inventory carrying cost per unit.
4. Total Capital Invested
5. Weighted average contribution

a. 2,3,5
b. 1,4
c. 1,2,3
d. 2,3
Ans b. 1,4

82 Given below are information obtained from the balance sheet of PQR ltd., What will be the
gross working capital for PQR ltd. for the year ending 31st March 2022?
Assets: (in Rupees)
i. Cash- 60,000
ii. Stock- 50,000
iii. Trade Debtors- 65,000
iv. Short term investment- 15,000 Liabilities: (in Rupees)
Liabilities: (in Rupees)
i. short term loans- 25,000
ii. Trade creditors- 5,000
iii. Outstanding expenses- 10,000

Prepared By: Dilraj Kaur-PGT Commerce 16

 a. 40,000
b. 1,90,000
c. 1,50,000
d. 2,30,000
Ans b. 1,90,000

83 A grocery owner has an equity stake of ₹ 40,000/- in the business. He has borrowed ₹
60,000/- at the interest rate of 10% per annum. He made a net profit of ₹ 20,000/- in one
year. What will be the Return on Equity for the grocery owner?
a. 20%
b. 30%
c. 35%
d. 50%
Ans d. Return on Equity = Net Income/Equity × 100 20,000/40,000 × 100 = 50%

84 VG Ltd. uses EOQ logic to determine the order quantity for its various components and 5
plan its orders. The Annual consumption is 80,000 units, Cost to place one order is ₹ 1,200;
Cost per unit is ₹ 50 and carrying cost is 6% of Unit cost.
What is the EOQ for VG Ltd.? How will the calculation of EOQ benefit VG ltd.?
Ans D = 80,000 C= 6% x 50 = 3 P = 1200 EOQ = √2𝐷𝑃/𝐶 = 2 x 80,000 x 1,200 / 3 =√6,40,00,000 =
8000 units Calculation of EOQ will
a) determine the ideal quantity for which an order should be placed so that there is no stock-
out situation.
b) help the company to assess the required quantity of raw material and supplies. The stock
of raw material should not be so huge that it incurs additional inventory holding cost.

SAMPLE QP-2023-24

85

Ans

86

Ans

Prepared By: Dilraj Kaur-PGT Commerce 17

87 The quantity of jeans sold by a shop is 1,200 per month @ of ₹1100/-. The cost of placing an
order and receiving goods is ₹1500/- per order. The inventory holding cost is ₹30/- per
annum. What is the economic order quantity for the shopkeeper?
Ans

88

Ans

YEAR 2024

89 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, that is to determine when to place an
order. For this he found out the procurement lead time, which is 2 months, and the demand
during this period, which is expected to be 300 bales of cotton fabric per month. So the order
should be placed when the stock reaches:
A) 600 bales
B) 450 bales
C) 300 bales
D) 150 bales
Ans A) 600 bales

90

Ans

Prepared By: Dilraj Kaur-PGT Commerce 18

91 A Beauty parlour had varying number of customers during five weekS. From the given
information, calculate "Unit Price' per customer.

Ans

92

Ans

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Prepared By: Dilraj Kaur-PGT Commerce 19