Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
M/s ABC is seeing relaxing its collection efforts. At current its sales are as Rs.40 lakhs, the ACP is here 20 days and variable cost to sales ratio is .8 and bad debts are as .05 percent. Relaxation in collection attempt is exacted to push sales up through Rs. 5 lakhs, raise ACP to 40 days and bad debt ratio to 0.06. ABC tax rate is 40%. Compute the effect of relaxing credit effort on net profit.
Solution:
? BD = bn (S0+ ? S) -b0 S0
= .06 (40+5) - .05 × 40
= 2.7 - 2
=.7 lakhs
? I = ? I = (ACPn - ACP0) [S0/360] + V(ACPn)( ?S/360)
= 40/360 (40 - 20) + 5/360 × 40 × .8
= 20/9 + 4/9
?I = 2.6666667
?NP = [ ?S (1 - V ) - ?BD] (1 - t ) - k?I
= [5 (.2) - .7] (.6) - .12 (2.666667)
= .18 - .32
= -.14 lakhs
As the effect on net profit is negative hence the credit efforts must not be relaxed.
How costs behave as the level of activity/volume changes. Why an understanding of cost behaviour is important ? Types Variable e.g. petrol, direct materials Fixed e.g.
Advantages of Value Added Statements 1) Managers might be in a better position to control their organizations own inputs than the cost and usage efficiency of purchased materia
Determine the Profitability ratios in relation to investment a) Return on capital employed/ return on investment b) Return on equity or return on equity share holders' funds
Transfer Pricing Transfer pricing can contribute directly to the process of departmental performance measurement and indirectly to the measurement of product performance. A
Directing There are number of good plans which are never realized. To realize a plan it requires the initiation and direction of the number of actions. Often, thes
Organizing (1) It is the establishment of the framework within which the required activities are to be performed and the designation of who should perform such activities. It inc
This is a most familiar form of medium term financing in obtaining plant and vehicles, machinery etc. In hire purchase transactions, the purchaser of goods will obtain the possessi
the applicability of standard costing in modern manufacturing environments in volatile environments
The case of variable quantity discounts In practice, suppliers may offer different discounts for different quantities purchased. For illustration: Segment Quantity
What is the objective of performance budgeting The objectives of performance budgets is to provide a closer linkage between planning and action and also to provide a common bas
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd