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Strategic Cost Management

1. You are running an ice cream parlour. The ice cream is manufactured in house and is served to the customers at the outlet. You want to improve the customer service and customer satisfaction near to perfection. Your consultant advised to adopt Six Sigma to drive process improvement.

Discuss the concept, its three critical success factors and relevant break through strategies of six sigma philosophy (10 Marks)

2. The cost of an article at the capacity level of 5000units is given as under. For the variation in 25% in the capacity above or below this, the individual expenses vary as mentioned in the column C Prepare the production cost budget at 4000 units and 6000 units (10 Marks)
Amount in Rs C (%)
Material cost 250000 100 %variable
Labour cost 150000 100% variable
Power 12500 80% semi variable
Repairs 20000 75% semi variable
stores 10000 100%variable

3. AMBER Ltd manufactures and sells four types of tyres namely, Small, medium, Large and XL. The sales mix in values comprises 33.33%, 41.67%, 16.67% and 8.33%for the all four products.
The total budgeted sales (100%) are Rs60000 per month.
The associated variable cost as a percent of selling value is as under-
Product- Small 60%, medium 68%, Large 80% and XL40%
The fixed cost per month is Rs15000

a. Define the term PV Ratio and Calculate the PV Ratio for all the four products (5 Marks)
b. Calculate the Breakeven sales and for the BEP sales, indicate the fixed cost, variable cost total cost and total sales revenue (5 Marks)


For Nmims answersheets contact
[email protected]
+91 95030-94040