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Capital Intensive Labor Intensive: Required: Determine The Following

This document contains a sample business and finance exam with 9 questions. It covers topics like inventory management, accounting standards, international trade, financial information for businesses, and crisis management. The questions range from calculating ratios and break-even points to discussing theories, goals, viewpoints, and economic advantages.

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Mahedi
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80 views2 pages

Capital Intensive Labor Intensive: Required: Determine The Following

This document contains a sample business and finance exam with 9 questions. It covers topics like inventory management, accounting standards, international trade, financial information for businesses, and crisis management. The questions range from calculating ratios and break-even points to discussing theories, goals, viewpoints, and economic advantages.

Uploaded by

Mahedi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BUSINESS & FINANCE

Time allowed - 2 hours


Total marks - 100
[N.B. - The figures in the margin indicate full marks. Questions must be answered in English. Examiner will take account
of the quality of language and of the way in which the answers are presented. Different parts, if any, of the same
question must be answered in one place in order of sequence.)
Marks
1. Discuss Theory X and Theory Y developed by McGregor in relation to human behavior. 5
2. Philips Corporation has decided to introduce a new product. The product can be manufactured using
either a capital-intensive or labor-intensive method. The manufacturing method will not affect the
quality or sales of the product. The estimated manufacturing costs of the two methods are as follows:
Capital Intensive Labor Intensive
Variable manufacturing cost per unit Tk. 14.00 Tk. 17.60
Fixed manufacturing cost per year Tk. 2,440,000 Tk. 1,320,000
The company's market research department has recommended an introductory selling price of Tk.30
per unit for the new product. The annual fixed selling and administrative expenses of the new
product are Tk.500,000. The variable selling and administrative expenses are Tk.2 per unit
regardless of how the new product is manufactured.
Required:
i. Calculate the break-even point in units if Philips Corporation uses the: 6
1. capital-intensive manufacturing method.
2. labor-intensive manufacturing method.
ii. Determine the unit sales volume at which the net operating income is the same for the two
manufacturing methods. 5
3. (a) What are likely to be the viewpoints of each of the following managers about the levels of the
various types of inventory: finance, marketing, manufacturing, and purchasing? 3
(b) What are the three primary goals of the just-in-time (JIT) philosophy? 3
(c) AK Sports Mart, a chain of sporting goods stores, sells 720,000 baseballs per year. (Assume
that sales are uniform throughout the year). The baseballs cost AK Sports Mart Tk.15 per dozen
(Tk.1.25 each). Annual inventory carrying costs are 20 percent of inventory value. The costs of
placing and receiving an order are Tk.144. Assume that inventory replenishment occurs
virtually instantaneously. 6
Required: Determine the following:
i. Economic order quantity, ii. Total annual inventory costs of this policy and iii. Optimal
ordering frequency
4. You are to study the following financial statements for two furniture stores and then answer the
questions, which follow:
Financial Statements
X Y
Tk. Tk. Tk. Tk.
Profit and loss accounts
Sales 555,000 750,000
Less: Cost of goods sold
Opening stock 100,000 80,000
Add Purchases 200,000 320,000
300,000 400,000
Less: Closing stock ( 60,000) (240,000) ( 70,000) (330,000)
Gross profit 315,000 420,000
Less: Depreciation 5,000 15,000
Wages, salaries and commission 165,000 220,000
Other expenses 45,000 (215,000) 35,000 (270,000)
Net profit 100,000 150,000

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Balance sheets
Fixed assets
Equipment at cost 50,000 100,000
Less: Depreciation to date ( 40,000) 10,000 ( 30,000) 70,000
Current assets
Stock 60,000 70,000
Debtors 125,000 100,000
Bank 25,000 12,500
210,000 182,500
Less: Current liabilities
Creditors (104,000) 106,000 (100,500) 82,000
116,000 152,000
Financed by:
Capital
Balance at start of year 76,000 72,000
Add: Net profit 100,000 150,000
176,000 222,000
Less: Drawings ( 60,000) ( 70,000)
116,000 152,000
Required:
(a) Calculate the following ratios for each business:
(i) gross profit as percentage of sales; (ii) net profit as percentage of sales; (iii) expenses as
percentage of sales; (iv) stock turnover; (v) rate of return of net profit on capital employed (use
the average of the capital account for this purpose); (vi) current ratio; (vii) acid test ratio; (viii)
debtor/sales ratio; (ix) creditor/purchases ratio. 9
(b) Which business seems to be the most efficient? Give possible reasons. 6
5. (a) What is the purpose of accounting standards? 3
(b) What are the different types of accounting standards that affect the professional accountants in
Bangladesh? 3
(c) What are the roles of the professional accountants? 4

6. What are the economic advantage of international free trade? Discuss the barriers to free
international trade in perspective of Bangladesh. 5+5
7. Why do businesses and managers need financial information? What are the qualities of good
information? 5+5

8. What is a crisis in business? What are the various types of crises usually faced by a business? How
are crises managed? 3+4+4

9. (a) Write down the various costs associated with holding inventory. 4
(b) C Ltd. has present annual sales level of Tk.10,000 units at Tk.300 per unit. The variable cost is
Tk.200 per unit and fixed costs amount to Tk.3,00,000 per year.
The company is considering a proposal to increase the credit from 1 month period to 2 months
and 3 months and has made the following estimates:
Existing Proposed
Credit period (month) 1 2 3
Increase in sales (percent) - 15 30
Bad debts (percent) 1 3 5
There will be an increase in fixed cost by Tk.50,000 on account of increase in sales beyond 25
percent level. The investment in receivables will cost the company 20 percent.
Required: Calculate the most paying credit policy. 12

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