PV ratio

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Strategic Cost Managementinfo_at_answersheets.in9
1 95030-94040
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•  Strategic Cost Management
•  
• Problem 1
• Initial Investment 500,000
• Annual savings of 100,000
• Cost of capital 9
• Find the payback period and discounted
  payback period (nearest year is acceptable),
  which one will you recommend and justify your
  recommendation
• Round to 3 decimal places for all
  calculations. Assume all savings happen at the
  end of year, starting from Year 1 (10 Marks)

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• Problem 2
• An auto component manufacturing company is
  contemplating introducing a new inspection
  process in their assembly line to save on
  rectifying cost. The current production is in
  batches, each batch produce 5000 components. The
  cost of inspection of each component is Rs 50,
  the cost of rectifying each defective component
  is Rs 250. If a defective component is sent to
  customer and returned by customer it cost the
  company Rs 500. Calculate at what percentage of
  defective rate it would be beneficial for the
  company to adopt the proposal. (10 Marks)
• Problem 3
• From the following details calculate and
  elaborate on
• Sales 150,000
• Total Cost 120,000
• Fixed Cost 60,000
• Profit 30,000
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• a. P/V ratio (5 Marks)
•  
• b. Break Even Point and Margin of Safety (5
  Marks)
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