MIDTERM EXAMINATION obstruction
Spring 2011
MTH302- Business Mathematics & Statistics (Session - 3)
Time: 60 min
Marks: 40
Question No: 1 ( Marks: 1 ) - Please choose
If the basic salary is Rs 6500 and the social charges are Rs 1820, what percentage of basic salary are the social charges?
► 27 %
► 28 %
► 29 %
► 30 %
Question No: 2 ( Marks: 1 ) - Please choose one
The price at which a business purchases merchandise is called the
► List
► Cost
► Investment
► Exchange rate
Question No: 3 ( Marks: 1 ) - Please choose one
A reduction of the amount due on an invoice is called a _______ .
► Trade discount
► Net discount
► Cash discount
► Unearned discount
Question No: 4 ( Marks: 1 ) - Please choose one
If Selling Price = Rs. 5890 and Markup Rate = 59.5 % then the Cost Price is equal to
► Rs. 3229.70
► 3692.79
► 2385.45
► 3504.55
Question No: 5 ( Marks: 1 ) - Please choose one
0.20% = ------------
► 0.2
► 0.02
► 0.002
► 0.0002
Question No: 6 ( Marks: 1 ) - Please choose one
What percentage is 10% of 85?
► 8.1
► 8.3
► 8.5
► None of these
Question No: 7 ( Marks: 1 ) - Please choose one
If a matrix has four column and 5 rows then its dimensions are
► 20
► 4x5
► 5x4
► 5x5
Question No: 8 ( Marks: 1 ) - Please choose one
If an asset is purchased at Rs 3000 on the date 6/29/2008 and the first depreication period ends on 11/29/2008, where salvage value is 300 and period is taken as 1 on 20% interest rate where basis =1, then which of the following function Returns the depreciation for given accounting period
► =AMORLINC(3000, 6/29/2008, 11/29/2008, 300, 1*12, 20%, 1)
► =AMORLINC(3000, 6/29/2008, 11/29/2008, 300, 1, 20% / 12 , 1)
► =AMORLINC(3000, 6/29/2008, 11/29/2008, 300, 1, 20%, 1)
► =AMORLINC(3000, 6/29/2008, 11/29/2008, 300, 1*12 , 20%/12, 1)
► None of these
Question No: 9 ( Marks: 1 ) - Please choose one
The break even point is a point when ----------------------
► Revenue is greater than cost.
► Revenue is less than cost.
► Revenue is exactly equal to cost.
► None of the above.
Question No: 10 ( Marks: 1 ) - Please choose one
This example returns the depreciation for an asset that costs Rs. 10,000, with a salvage value of $6,000. The useful life of the asset is 4 years. The depreciation is being calculated for the first year, and there are 12 months in the first year.
► =DB (10000, 6000, 4, 1, 12)
► =DB (10000, 6000, 4, 12, 1)
► =DB (6000, 10000, 4, 12, 1)
► =DB (10000, 6000, 4, 1, 1)
Question No: 11 ( Marks: 1 ) - Please choose one
The text concatenation operator is used to
► include “:” and “,”
► calculate exponentiation: ^
► combine two text strings
► make comparisons.
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following formulas is the correct formula for calculating selling price
► Cost price (1+Cost price × %Markup on cost)
► Cost price (1+ %Markup on cost)
► Cost price (Cost price × %Markup on cost)
► Cost price (Cost price + Cost price × %Markup on cost)
Question No: 13 ( Marks: 1 ) - Please choose one
If the cost & selling price of a pen are Rs.12 & Rs.15 respectively, profit percentage is:
► 33.33%
► 25%
► 20%
► 10%
Question No: 14 ( Marks: 1 ) - Please choose one
Given FC = Rs.5000 ,CM= Rs. 30 ,VC= Rs. 150 , Capacity = 320units then BEP in units =
► 4500 units
► 167 units
► 33 units
► 16 units
Question No: 15 ( Marks: 1 ) - Please choose one
3x2 + 5x – 7 is --------------- expression.
► Monomial
► Binomial
► Trinomial
► Linear
Question No: 16 ( Marks: 1 ) - Please choose one
If there is a change of -30% in the price of an item, what does the negative sign show?
► The price is decreasing.
► The price has low rate of change.
► None of the above.
► The price is increasing.
Question No: 17 ( Marks: 1 ) - Please choose one
The price-earning ratio is calculated as…………..
► Market value per share/Earning per share (EPS)
► Earning per share (EPS)/Market value per share
► Market value per share+Earning per share (EPS)
► Market value per share-Earning per share (EPS)
Question No: 18 ( Marks: 1 ) - Please choose one
Net current asset value per share (NCAVPS) is calculated as………
► No. of shares outstanding/(Current assets-total liabilities)
► (Current assets-total liabilities)/No. of shares outstanding
► No. of shares outstanding+(Current assets-total liabilities)
► No. of shares outstanding-(Current assets-total liabilities)
Question No: 19 ( Marks: 1 ) - Please choose one
What shall be contribution margin if sale price is Rs.50 and variable cost is
Rs.30?
► Rs.80
► Rs.20
► Rs.30
► none of these
Question No: 20 ( Marks: 1 ) - Please choose one
For multiplication of two matrices A and B
► The no. of rows of A must be equal to columns of B
► The no. of rows of B must be equal to no. columns of A
► The no. of columns of A must be equal to no. rows of B
► None of these
Question No: 21 ( Marks: 2 )
The price of a sandwich maker is Rs 2000. The company offers a 25% trade discount. Find trade discount amount.
Solution
Sandwich Price Rs.2, 000
Trade Discount Rate 25%
Trade Discount Amount =2,000*25/100
=Rs.500
Question No: 22 ( Marks: 2 )
A firm sells its new product at Rs. 65 per unit. If the variable cost is Rs 40, find the contribution margin.
Solution
Sale Price Per Unit Rs.65
Variable Cost Rs.40
Contribution Margin =S-VC
=65-40
= Rs.25 per unit
Question No: 23 ( Marks: 3 )
Ratio of sales of Product X to sales of Product Y is 5:4. The sales of product X is forecasted at Rs. 200,000. What should be the Sales of product Y to maintain the ratio of sales between the two products?
Solution
Ratio x to y 5:4
Sale of Product x Rs.200, 000
Sale of product of y =200,000 * 4/5
=Rs.160, 000
Question No: 24 ( Marks: 3 )
A company sells its item at Rs. 125 per unit. If the variable cost is Rs 80, find the contribution rate.
Solution
Sale Price per unit Rs.125
Variable Cost Rs.80
Contribution margin =S-VC
=125-80
=Rs.45
Contribution Rate =CM/S*100
=45/125*100
=36%
Question No: 25 (Marks: 5)
Solution
Cost price =$1 for 10 Apples
Cost price per apple =1/10
=$0.1
Cost price of dozen apples =0.1*12
=$1.2
Profit Margin 25%
Sale price =1.2*125/100
=$1.5
Question No: 26 ( Marks: 5
Evaluate the sum of the years digits depreciation of an asset having the cost of Rs.10, 000 for a period of 5 years such that salvage value after 7 years is Rs.5000.
Solution
Cost Price Rs.10, 000
Salvage value after 7 years Rs.5, 000
Depreciable Value =Cost Price – Salvage value
=10,000-5,000
=5,000
Sum of Years digit depreciation. =7+6+5+4+3+2+1
=28
1st year depreciation =7/28*5000 =Rs.1, 250
2nd year depreciation =6/28*5000 =Rs.1, 071
3rd year depreciation =5/28*5000 =Rs.893
4th year depreciation =4/28*5000 =Rs.714
5th year depreciation =3/28*5000 =Rs.536
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What will be the answer of the SUMIF formula? |
1075 |
985 |
855 |
130 |
Question No: 2 ( Marks: 1 ) - Please choose one |
If you invest some amount at an interest rate of 8%, then at the end of 9 years. |
What will be the value of Accumulation Factor? |
12.736 |
12.487 |
12.965 |
JOIN NOW |
WWW.falconsofvu.COM |
12.856 |
Question No: 3 ( Marks: 1 ) - Please choose one |
If Cost = Rs. 7060 and Markup Rate = 46.7% then Selling price equal to ----------- |
--- |
Rs. 11253.05 |
Rs. 32970.2 |
Rs. 10357.02 |
Rs. 9046.7 |
Question No: 4 ( Marks: 1 ) - Please choose one |
The margin is the difference between the selling price and the _____. |
Profit |
Revenue |
Cost |
tax |
Question No: 5 ( Marks: 1 ) - Please choose one |
Sale price is the selling price less the ________ |
Markdown |
Revenue |
Cost |
Profit |
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Question No: 6 ( Marks: 1 ) - Please choose one |
Principal remains constant through out the agreement period in: |
Compound interest |
Annuity |
Simple interest |
Nominal interest |
Question No: 7 ( Marks: 1 ) - Please choose one |
Monthly installments of a leased car are calculated by using the |
techniques of: |
Simple interest method |
Compound interest method |
Annuity |
Hit & trial method |
Question No: 8 ( Marks: 1 ) - Please choose one |
Sum of annuity is an accumulated amount of: |
Original payments and discount |
Original payments and interest |
Interest and the payment yet not paid |
Compound interest |
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Question No: 9 ( Marks: 1 ) - Please choose one |
Find x if 3x + 7 – x = 17. |
5 |
4 |
12 |
-5 |
Question No: 10 ( Marks: 1 ) - Please choose one |
If |
Original Price |
= Rs. 3120 and |
Markdown Rate = 6.3 % |
then the |
Sale Price |
is equal |
to |
2933.44 |
3033.2 |
2910.4 |
3316.56 |
Question No: 11 ( Marks: 1 ) - Please choose one |
Which statement is true? |
Social charges comprise the leaves, group insurance and medical. |
Social charges comprise House rent and conveyance allowance. |
Social charges comprise gratuity and provident funds. |
Social charges comprise employee’s children’s education, club membership only. |
Question No: 12 ( Marks: 1 ) - Please choose one |
Witch of the following percent is |
of the basic salary? |
Conveyance Allowance |
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2.5% |
45% |
5% |
None of these |
Question No: 13 ( Marks: 1 ) - Please choose one |
If a and b are any two integers such that a>b then a-b is |
positive |
negative |
zero |
cannot be told |
Question No: 14 ( Marks: 1 ) - Please choose one |
The short cut method of showing a number is multiplied by itself is called |
Superscript |
Subscript |
Exponent |
None of these |
Question No: 15 ( Marks: 1 ) - Please choose one |
Dimension of a matrix means |
Column space |
Row space |
Order of the matrix |
None of these |
Question No: 16 ( Marks: 1 ) - Please choose one |
In which Trust Fund, the company does not deduct, but only contribute 1/11th of |
Basic Salary of the employee per month? |
Provident Fund |
Gratuity Fund |
Stock yield |
Interest |
Question No: 17 ( Marks: 1 ) - Please choose one |
If x: y = y: 1, then |
X = y |
X = y^2 |
X = y / x |
X = -y |
Question No: 18 ( Marks: 1 ) - Please choose one |
If the basic salary of an employee is 8, 000 Rs. allowances are 6000 Rs. and total cost of |
leaves per year is equal to 28280 Rs. then the cost of leaves as percent of gross salary is |
29.46% |
16.83% |
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22.23% |
28.28% |
Question No: 19 ( Marks: 1 ) - Please choose one |
Given FC = Rs.5000 ,CM= Rs. 30 ,VC= Rs. 150 , Capacity = 320units then BEP in units |
= |
4500 units |
167 units |
33 units |
16 units |
Question No: 20 ( Marks: 1 ) - Please choose one |
The Break Even Point in units is 64 and Production Capacity = 320 units |
per period, then The break Even point as a % of capacity will be |
35% |
30% |
25% |
20% |
Question No: 21 ( Marks: 2 ) |
If a company is currently trading at Rs. 300 a share and earnings over the last 12 months |
were Rs. 10.5 per share, then find the price earning ratio for the stock |
Question No: 22 ( Marks: 3 ) |
Given the matrices |
Compute A Matrix is a rectangular array of numbers. The plural of matrix is matrices. Matrices are usually represented with capital letters such as Matrix A, B, C. For example . |
Question No: 23 ( Marks: 5 ) |
Find the interest earned on an annuity due if payments of $2,000 per year are |
made for 15 years into an account paying 5% compounded |
annually.(Accumulated Value) |
Question No: 24 ( Marks: 10 ) |
A,B and C, each of them working alone can complete a job in 6, 8 and 12 days |
respectively. If all three of them work together to complete a job and earn $ 2340, what |
ill be share of each earnings? |
MIDTERM EXAMINATION
Fall 2011
MTH302- Business Mathematics & Statistics (Session - 2)
Question No: 1 ( Marks: 1 ) - Please choose one
The % Markdown is
► 10%
► 20%
► 30%
► 40%
Question No: 2 ( Marks: 1 ) - Please choose one
► $22
► $24
► $26
► $30
Question No: 3 ( Marks: 1 ) - Please choose one
► =DETERM(B4:E7)
► =MDTERM(B4:E7)
► =MDETERM(B4:E7)
► =MDETERM(B4;E7)
Question No: 4 ( Marks: 1 ) - Please choose one
► Zero period
► One period
► Two period
► Any arbitrary period
Question No: 5 ( Marks: 1 ) - Please choose one
► 33.33%
► 25%
► 20%
► 10%
Question No: 6 ( Marks: 1 ) - Please choose one
► =DB (10000, 5, 8000, 3, 10)
► =DB (10000, 8000, 5, 10, 3)
► =DB (10000, 8000, 5, 3, 10)
► =DB (10000, 8000, 10, 3, 5)
Question No: 7 ( Marks: 1 ) - Please choose one
Which of the following functions is not related to financial analysis?
► AMORDEGRC
► AMORLINC
► CUMIPMT
► MDETERM
Question No: 8 ( Marks: 1 ) - Please choose one
► 0.35
► 0.25
► 0.45
► 0.55
Question No: 9 ( Marks: 1 ) - Please choose one
► Column space
► Row space
► Order of the matrix
► None of these
Question No: 10 ( Marks: 1 ) - Please choose one
If there is a -30% change in the price of an item, what does the negative sign show?
► The price is increasing.
► The price is decreasing.
► The price has low rate of change.
► None of the above.
Question No: 11 ( Marks: 1 ) - Please choose one
► Half of
► One third
► 40%
► One fourth
Question No: 12 ( Marks: 1 ) - Please choose one
► I=PRT
► I=P+R+T
► I=PT
► I=P(R+T)
Question No: 13 ( Marks: 1 ) - Please choose one
► Decimal
► Ratio
► Proportion
► Both decimal & ratio
Question No: 14 ( Marks: 1 ) - Please choose one
► Simple interest method
► Compound interest method
► Annuity
► Hit & trial method
Question No: 15 ( Marks: 1 ) - Please choose one
► 22550
► 22500
► 21000
► 22510
Question No: 16 ( Marks: 1 ) - Please choose one
► 65
► 56
► 75
► 90
Question No: 17 ( Marks: 2 )
Simple interest is given by
I= P*R*T/100
P= principal = $39000
R= interest rate= 1.65%
T= 1.5 year
Interest, I =(39000 * 1.65 *1.5)/100 = Rs 965.25
Question No: 18 ( Marks: 2 )
Cost price = 2000Rs
Selling price = 6500Rs
Then what will be %Markup on cost?
MUC= S- C (Rs markup on cost = selling price- cost price)
= 6500-2000 = Rs 4500
% markup on cost = (MuC/cost price) * 100 = (4500/2000) *100= 225%
Question No: 19 ( Marks: 3 )
Write the output of B9, B10, B11 and B12. If you think the formula is incorrect write "Error" in output.
ANSWER:
The output of =sum(B3,B4,B5,B6) = 100
=multiply(B5,B6) will not give result because multiply is not a excel function
B4/B6 is not a formula because in excel formula must start with "="
=B4% will return 0.2
Question No: 20 ( Marks: 5 )
Selling price = 6500
Profit = 25%
Profit in Rs= (6500*25)/100= Rs 1625
Question No: 21 ( Marks: 10 )
(a)
(b)
(c)
a)
A = 2 0 -3 2 + B = 0 -4 -7 2
-1 8 10 -5 12 3 7 9
A+B= 2+0 0-4 -3-7 2+2
-1+12 8+3 10+7 -5+9
A+B = 2 -4 -10 4
11 11 17 4
b)
B-A= 0-2 -4-0 -7-(-3) 2-2
12-(-1) 3-8 7-10 9-(-5)
B-A= -2 -4 -4 0
13 -5 -3 14
c) A+C is not conformable for addition because for addition number of rows and columns of A must be equal to number of rows
MTH302 (BUSINESS MATH AND STATISTICS)
Short Notes Lectures (1-22) LONG QUESTION
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TYPES OF EMPLOYEES
1. regular
2. part time
3. incentive base
GROSS EARNINGS/SALARY
Gross earning includes the following?
1. basic salary
2. allowances
i. house rent
ii. conveyance allowance
iii. utilities allowances
TAXATION RULES ON ALLOWNCES
If allowances are 50% of basic salary, the amount is treated as tax free. Any allowance that exceed this allowance are considered taxable, both for the employee as well as the company.
PROVIDENT FUND
A company can establish a provident fund for the benefit of the employees. By law, 1/11th of basic salary per month is deducted by the company from the gross earning of the employees. An equal amount i.e. 1/11th of basic salary per month is contributed by the company to the provident fund to the account of the employee. Total becomes 2/11th of the basic salary.
Example:
Basic = 10000
Allow = 5000
Provident fund= ?
Employee contribution to provident fund = 1/11 x 10000 = 909.1
Company contribution to provident fund = 1/11 x 10000=909.1
Total provident fund = 909.1+909.1 = 1818.2
GRATUITY FUND
A company can establish a gratuity trust fund for the benefit of the employees. There is a saving of 1/11th of basic salary on behalf of the employee in gratuity fund.
LEAVES
CL = 18 days per year
EL = 18
SL = 12
Total cost of leaves as percent of gross salary = 18.2%
SOCIAL CHARGES
Medical / group insurance = 5% of gross salary
Education, club member ship = 5.2% of gross salary
Leaves = 18.2% of gross salary
Total social charges = 29% of gross salary
GROS REMUNERATION
It is pay or salary typically monetary payment for services rendered, as in an employment like
i. basic salary
ii. house rent allowances
iii. conveyance
iv. utilities
v. provident fund
vi. gratuity fund
vii. leaves
viii. group insurance
ix. mislaneous charges
PERCENTAGE
Percentage is formed by Xing a number called the base by a percent called the rate.
% = base x rate
AVERAGE = sum / n
WEIGHTED AVERAGE
It is one type of earthmatic mean of a asset of data in which some elements of the sets carry more importance (weight) than others.
Example:
Unit hours
A 6 300
B 3 200
C 1 100
First convert weight in fractions
6+3+1= 10
6/10 = .6
3/10 = .3
1/10 = .1
weighted average = sum of fractions x hours
= (.6x300) + (.3x200)+ (.1x100) = 250
PERCENTAGE CHANGE
Change = final value – initial value
Percentage change = change / initial value x 100%
STOCK
It is share in the ownership of a company
STOCK YIELD/
It can refer to the rate of income generated from a stock in the form of regular dividends.
EARNING PER SHARE (EPS)
EPS = total profits / number of shares
PRICE EARNING RATIO: = market value of shares / EPS
NET CURRENT ASSET VALUE PER SHARE
= current asset – total liabilities / number of outstanding share
CURRENT ASSETS
The value of all assets that are reasonably expected to be converted into cash with in one year
LIABILITIES
A company’s legal debts or obligations that arise during the course of business operations
MARKET VALUE
The price at which investors buy or sell a share of stock at a given time
FACE VALUE
Original cost of a share of stock which is shown on the certificate
DIVIDENT
A company distributes a part of the profit it terms as dividend
DISCOUNT
It is rebate or reduction in pirce
NET COST PRICE = list price – discount
SIMPLE INTEREST I = PTR/100
P = Principal
R= rate
T = time in years
I = interest
COMPOUND INTEREST S= P(1+R/100)^N
P = Principal
R = rate
N = no of years
S = compound interest
ANNUITY
Annuity is sequence of payment/installment
Annuity = C x [(1+i)n – 1 / i]
C= payment per period / amount of annuity
i = interest rate
n = number of payments
ACCUMULATED VALUE
The accumulated volves of an annuity is the total payments mode including the interest.
R = amount of annuity
N = number of payments
I = interest rates
S = accumulated vlue
A = discounted / present worth of an annuity
S = r [(1+i)n – 1 / i]
Accumulation factor for n payments
[(1+i)n – 1 / i]
accumulated value = payment per period x accumulation factor for n payment
DISCOUNTED FACTOR RATE
When future value is converted into present worth, the rate at which the calculations are made.
Example.
Rate of interest = 4.25% = 0.0425
No of periods = 18
Amount of annuity = 1000 Rs.
Accumulation factor = ?
Accumulated value = ?
Discounted value = ?
AF = (1+0.0425) -1 / 0.0425 = 26.24
S = 10000 X 26.24 = 260,240 Rs.
DV = first of all we find discount factor
DF = (1-1/(1+i)n / i)
= (1-1/(1+i)n / i)
= (1-1/(1+0.0425)18 / 0.0425) = 12.4059
DV= 10000x12.4059 = 124059 Rs.
MATRIX
A matrix is a rectangular array of numbers. The plural of matrix is matrices like
A = ( -1 9
-3 4)
DIMENSION
Dimension order of a matrix = rows x columns
RATIO
A ratio is a comparison between things. If in a room there are 30 men and 15 women then the ratio of men to women is 2 to 1. this is written as 2:1 and read is “two is to one”. “:” is the notation for a ratio.
PROPORTION
A proportion is an equation with the ratio on each side. It is a statement that two ratios are equal. 3:4 = 6:8 or ¾ = 6/8 is an example of proportion
MIDDLEMAN
A middle man is a person who buys a product directly from the manufacturer, and then either sells the product at retail prices to the public, or sells the product at wholesale prices to a distributor.
Trade Discount
Amount of discount = d × L
Where, d = Percentage of Discount
L = List Price
Net Price = L – Ld = L(1 – d)
Net Price = List Price – Amount of Discount
MARKUP:-
Markup is an amount added to a cost price while calculating a selling price.
Markup as Percentage of Cost (MUC:-
Here markup is some percentage of cost price. For simplicity, it is also named as %Markup on cost. The relation between %markup on cost, cost price and selling price is:
Selling Price = Cost price + (Cost price × %Markup on cost)
= Cost price (1 + %Markup on cost)
Markup as Percentage of Sale price (MUS):
Here markup is some percentage of selling price. For simplicity, it is also named as %Markup on sale. The relation between %markup on sale, cost price and selling price is:
Selling Price = Cost price + (Selling price × %Markup on sale)
Cost price = Selling price – (Selling price × %Markup on sale)
= Selling price (1 – %Markup on sale)
Rs Markup:
Markup in terms of rupees is called Rs markup. The relations between Rs markup, cost price and selling price are:
1. Selling Price = Cost price + Rs Markup
2. Rs Markup = %Markup on cost × Cost price
3. Rs Markup = %Markup on sale × Selling price
For example:
The cost price of certain item is 80Rs and its selling price is 100Rs. Then
Rs Markup = Selling price – Cost price
= 100 – 80
= 20 Rs
MARKDOWN:-
Markdown is a reduction from the list/cost price.
DISCOUNT:-
Discount is a reduction in price which the seller offers to the buyer.
SERIES TRADE DISCOUNT:-
This refers to the giving of further discounts as incentives for more sales. Usually such discount is offered for selling product in bulk.
L = List price = 100
D = discounts
Net price = L(1-D1)(1-D2)(1-D3)
Single equivalent discount rate = L – Netprice = ?%
Rs. Discount = (0.2787)(20000)
= 5,574 Rs
TRADE DISCOUNT-EXAMPLE 2 Find the single discount rate that is equivalent to the series 15%, 10% and 5%. TradeDiscount Apply the multiple discount to a list price of Rs. 100. Net price = (1-d1)(1-d2)(1-d3) = 100(1 -15%) (1 - 10%) (1 - 5%) =100(0.85) (0.9) (0.95) = 100(0.7268) = 72.68 % Discount = 100 - 72.68 = 27.62% |
CASH DISCOUNT:-
Cash Discount is allowed on Invoices, Returned Goods, Freight, Sales Tax and A common business phrase for a cash discount is "3/10, net/30," meaning that a 3% discount is offered if the amount due is paid within 10 days; otherwise 100% of the amount due is payable in 30 days
CASH DISCOUNT-EXAMPLE
Invoice was dated May 1st. The terms 2/10 mean that 2% discount is offered if invoice is paid up to 10thMay.
What is the net payment for invoice value of Rs. 50,000 if paid up to 10th May?
Cash Discount
N = L(1 – d)
= 50,000(1-0.02)
= 50,000(0.98)
= 49,000 Rs.
DISCOUNT PERIODS
Discount Periods are periods for the buyer to take advantage of Discount Terms.
CREDIT PERIODS
Credit Periods are periods for the buyers to pay invoices within specified times.
PARTIAL PAYMENTS
When you buy on credit and have cash discount terms, part of the invoice may be paid within the specified time. These part payments are called Partial Payments.
You owe Rs. 40,000.
Your terms were 3/10 (3% discount by 10th day).
Within 10 days you sent in a payment of Rs. 10,000.
Rs. 10,000 was a part payment.
How much is your new balance?
First we will find the amount that if 3% discount is given on it, the net amount is 10000Rs.
Let that amount is t. Then
10000 = t (1 – 0.03)
This implies, t = 10000
(1 – 0.03)
Thus, t = 10309Rs
This means that although you pay 10,000Rs, due to 3% cash discount 10309Rs among 40,000Rs is paid.
Hence the new balance = 40000 – 10309 = 29691Rs.
MARKETING TERMS
There are a number of marketing terms.
First of these is the Manufacturer Cost. This is the cost of manufacturing.
Next is the price charged to middlemen in “The Distribution Chain”.
The Distributor>Wholesaler>Retailer is a chain.
The next term is the Selling Price. This is the price charged to Consumers
by Retailers. It may or may not be the same as list price.
Operating Expenses
Expenses the company incurs in operating the business, e.g. rent, wages and utilities is called operating Expenses
Selling Price:-
Selling Price is composed of Cost and Rs Markup.
Selling Price (S) = Cost (C) + Rs Markup (M)
MARGIN:-
While determining Sale Price, a company includes the operating expenses and profit to their own cost. This amount is called the margin of the company. It is usually calculated as percentage but can also be expressed as rupees. It is also named as markup on sale.
Margin or markup on sale = Selling price - Cost price ×100%
Selling Price
Selling price = Cost price + Rs Margin
Margin and markup confuse many. By margin, company evaluates that for every rupee generated in sales, how much is left over to cover basic operating costs and profit. Markup represents the amount added to a cost to arrive at a selling price
Markup on cost = Selling price – Cost price ×100%
Cost price
Note: Remember unless it is mentioned that markup is on sale, simple markup means markup on cost.
RS. MARKUP AND PERCENT ON COST
Tanveer’s flower business sells floral arrangements for Rs. 35.
To make his desired profit, Tanveer needs a 40% Markup on cost.
What do the flower arrangements cost Tanveer?
What is the Rs. Markup?
Rs. Markup and Percent Markup on Cost
Sale price S = Cost C + {C ×Markup on cost (MUC)}
S = C + 0.40(C)
35 = 1 .40(C)
C = 35/1,4 = 25 Rs.
Rs Markup = 25 x 0.4
= 10 Rs.
Selling Price = Cost price + (Selling price × %Markup on sale)
CONVERTING MARKUPS
Convert 50% Markup (MU) on Cost to %MU on Sale
Formula for converting %Markup on Sale (mus) to %Markup on Cost Price (muc) is:
% Markup on Selling Price (mus) = %Markup on Cost / (1 + %Markup on Cost)
mus = muc/(1+muc)
Solution
% Markup on Sale (mus) = 0.5 / (1+0.5) = 0.5/1.5
mus = 0.3333 = 33.33%
Converting Markups
Converting 33.33% MU on Sale to %MU on C
Convert % Markup on Cost (muc) to % Markup on selling price (mus):
% Markup on cost = % Markup on S / (1 - % Markup on S)
muc = mus / (1-mus)
Solution
Markup on cost = 0.3333/(1 – 0.333)
= 0.3333/0.6666 = 0.5
= 50%
MARKDOWN
Reduction from original selling Price is called Markdown.
Formula
%Markdown = (Rs. Markdown / Selling Price (original)) ×100%
MARKDOWN-EXAMPLE 1
Store A marked down a Rs. 500 shirt to Rs. 360.
What is the Rs. Markdown?
What is the %markdown?
Rs. Markdown
Let S = Sale price
Rs. Markdown = Old S – New S
= Rs. 500 – Rs. 360
= Rs. 140 Markdown
% Markdown
% Markdown = Markdown ×100%
Old S
% Markdown = 140×100%
500
= 0.28×100%
= 28 %
PROJECT FINANCIAL ANALYSIS
Financial analysis is the analysis of the accounts and the economic prospects of a firm, which can be used to monitor and evaluate the firm's financial position, to plan future financing, and to designate the size of the firm and its rate of growth.
COST ESTIMATES
cost estimates cover calculations based on quantities and unit rates.
REVENUE ESTIMATES
Along with costs even revenues are calculated. These calculations are similar to component costs.
FORECASTS OF COSTS
Forecasting requires a technique for projections. One of such technique, Time Series Analysis, will be covered later in this course.
FORECASTS OF REVENUES
These will be done similar to the forecast of costs. Here also the method must be determined first. Once the methodology is clear, the worksheets can be prepared easily.
NET CASH FLOWS
The difference between Revenue and Cost is called the Net Cash flow. This is an important calculation as the entire Project Operation and Performance is based on its cash flows.
BENEFIT COST ANALYSIS
This is the end result of the Project Analysis. The ratio between Present Worth of Benefits and Costs is called the Benefit Cost (BC) ratio.
INTERNAL RATE OF RETURN
Internal Rate of Return or IRR is that Discount Rate at which the Present Worth of Costs is equal to the Present Worth of Benefits. IRR is the most important parameter in Financial and Economic Analysis.
BREAK-EVEN ANALYSIS
In every project where investment is made it is important to know how long it takes to recover the investment. It is also important to find the breakeven point where the Cash Inflow becomes equal to Cash Outflow. After that point the company has a positive cash flow (i.e. there is surplus cash after meeting expenses).
BEP in units = Fixed Costs_____
Contribution Margin per unit
BEP in Rs calculates the revenue that must be obtained to reach break even point. BEP in Rs = Fixed Costs × Net Sales
Contribution Margin
BEP in Rs = Fixed costs × Selling Price per unit
Contribution Margin per unit
BEP as % of capacity = BEP in units_____ × 100 %
Production capacity
Excel Functions for Financial Analysis
AMORDEGRC(cost,date_purchased,first_period,salvage,period,rate,basis)If an asset is purchased in the middle of the accounting period, the prorated depreciation is taken into account.
AMORLINC(cost,date_purchased,first_period,salvage,period,rate,basis)
Returns the depreciation for each accounting period. If an asset is purchased in the middle of the accounting period, the prorated depreciation is taken into account.
CUMIPMT
Returns the cumulative interest paid between two periods.
CUMPRINC
Returns the cumulative principal paid on a loan between two periods
DB(cost,salvage,life,period,month)
Returns the depreciation of an asset for a specified period using the fixed-declining balance method.
DDB(cost,salvage,life,period,factor)
Returns the depreciation of an asset for a specified period using the double declining balance method or some other method you specify
MIRR(values,finance_rate,reinvest_rate)
Returns the modified internal rate of return for a series of periodic cash flows. MIRR considers both the cost of the investment and the interest received on reinvestment of cash.
IRR(values,guess)
Returns the internal rate of return for a series of cash flows
PV(rate,nper,pmt,fv,type)
Returns the present value of an investment
NPV(rate,value1,value2, ...)
Returns the net present value of an investment based on a series of periodic cash flows and a discount rate
XNPV(rate,values,dates)
Returns the net present value for a schedule of cash flows that is not necessarily periodic.
SLN(cost,salvage,life)
Returns the straight-line depreciation of an asset for one period
SYD(cost,salvage,life,per)
Returns the sum-of-years' digits depreciation of an asset for a specified period
SYD = (cost-salvage) x (life – per + 1) x 2
(life)(life + 1)
VDB(cost,salvage,life,start_period,end_period,factor,no_switch)
Returns the depreciation of an asset for any period you specify, including partial periods, using the double-declining balance method or some other method you specify. VDB stands for variable declining balance.
XIRR(values,dates,guess)
Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic.
LINEAR EQUATIONS
Linear equations have following applications in Merchandising Mathematics:
· Solve two linear equations with two variables
· Solve problems that require setting up linear equations with two
variables
· Perform linear Cost-Volume-Profit and break-even analysis employing:
· The contribution margin approach
· The algebraic approach of solving the cost and revenue functions
Production Capacity (PC)
It is the number of units a firm can make in a given period.
Contribution Margin
Contribution Margin is the Rs. amount that is found by deducting Variable Costs from Sales or revenues and ‘contributes’ to meeting Fixed Costs and making a ‘Net Profit’Contribution Margin = Net Sales – Variable Cost = S – VC
Contribution margin per unit =CM =Sale price per unit – Variable cost per unit
Contribution Rate (CR)
Contribution rate = Contribution Margin × 100% = CM × 100%
Net sales S
Contribution rate = Contribution Margin per unit × 100%= CM × 100%
Sale price per unit S
Question No: 21 ( M a r k s: 2 )
Find the average of given Data: 10, 17, 19, 27, 22
Average = 10+17+19+27+22/5
= 77.4
Question No: 22 ( M a r k s: 3 )
The price of an item was Rs. 1500 and increased by 15%. What is the new price?
New prince = 1500 + 15/100
= 1750
Question No: 20 ( M a r k s: 5 )
A gold chain is sold for Rs. 6500 at a gain of 25%. Find the profit.
Sold = 6500
Rate of gain = 25%
Profit = 6500*25/100
= 1625
Question No: 21 ( M a r k s: 2 )
Find the Discount where price is 2000 and discount rate is 12%.
List price = 2000
Rate of discount = 12%, = 12/100, = 0.12
Discount = ?
Discount = list prince x Discount rate
= 2000 x 0.12
= 240
Question No: 22 ( M a r k s: 3 )
Calculate compound interest earned on Rs. 2250 invested at 8% per annum for 6 years
Answer:
P = 2250
Interest year 1st = 8% = 8/100 = 0.08
New Price = 2250 + 0.08,
= 2250.08
Interest year 2nd = 2250.08 + 0.08
= 2250.16
Interest year 3rd = 2250.16 + 0.08
= 2250.24
Interset year 4th = 2250.24 + 0.08
= 2250.32
Interest year 5th = 2250.32 + 0.08
= 2250.4
Interest year 6th = 2250.4 + 0.08
= 2250.48
Question No: 24 ( M a r k s: 10 )
The price of medicine inventory is Rs. 500,000.
The series discounts are 20%, 10%, 5%.
Net prince = L(1 – D1)(1 – d2)(1-d3)
= 500,000(1 – 20%)(1 – 10%)(1 – 5%)
= 500,000(1 – 0.20)(1 – 0.10)(1 – 0.05)
= 500,000(0.8)(0.9)(0.95)
= 500,000(2.65)
= 1325000
Question No: 23 (M a r k s: 3 )
An item is marked down 15%; the sale price is Rs. 127.46. What was the original price?
Rs markdown = current selling price x %markdown
= 127.46 x 0.15
= 19.119
New selling prince = Current selling prince – Rs markdown
= 127.46 – 19.119
= 108.341
Question No: 25 (M a r k s: 5 )
The product that regularly sells for $650 is marked down to $500. What is the rate of markdown?
Markdown rate = current price / Rs markdown * 100
= 650/500*100
= 130
MIDTERM EXAMINATION
Spring 2011
Question No: 1 ( Marks: 1 ) - Please choose one
How many runs did A make?
► 162
► 108
► 72
► 112
Question No: 2 ( Marks: 1 ) - Please choose one
► $12000
► $12500
► $10800
► $9000
Question No: 3 ( Marks: 1 ) - Please choose one
► The mean is 103.
► The mean is 104.
► The median is 100.
► The median is 106.
Question No: 4 ( Marks: 1 ) - Please choose one
► 100
► Same number
► 1000
► 10
Question No: 5 ( Marks: 1 ) - Please choose one
► 23%
► 30%
► 18%
► 42%
Question No: 6 ( Marks: 1 ) - Please choose one
► n>p
► m<=q
► q=p
► n=p
Question No: 7 ( Marks: 1 ) - Please choose one
► Face value
► Market value
► Accumulated value
► Earning value
Question No: 8 ( Marks: 1 ) - Please choose one
► True
► False
Question No: 9 ( Marks: 1 ) - Please choose one
► Yes
► No
Question No: 10 ( Marks: 1 ) - Please choose one
► List price +trade discount
► List price - trade discount
► List price /trade discount
► List price * trade discount
Question No: 11 ( Marks: 1 ) - Please choose one
► Comparison operators
► Concatenation operator
► Reference operators
► Arithmetic operators
Question No: 12 ( Marks: 1 ) - Please choose one
► 6350 Rs
6350 Rs
► 5508 Rs
5508 Rs
► 5585 Rs
► 4650 Rs
Question No: 13 ( Marks: 1 ) - Please choose one
► add by 100
► subtract by 100
► multiply by 100
► divide by 100
Question No: 14 ( Marks: 1 ) - Please choose one
► AI = I
► AI = A
► A + I = A
► A + I = I
Question No: 15 ( Marks: 1 ) - Please choose one
► 36
► 50
► 60
► 120
Question No: 16 ( Marks: 1 ) - Please choose one
► Zero period
► One period
► Two periods
► Three periods
Question No: 17 ( Marks: 1 ) - Please choose one
► a present value of a dollar, future value of a dollar
► a future value of an annuity due, a present value of an annuity due
► a future value of an annuity due, a present value of an ordinary annuity
► a future value of an ordinary annuity, a present value of an annuity due
► a future value of an ordinary annuity, a present value of an ordinary annuity
Question No: 18 ( Marks: 1 ) - Please choose one
By multiplying the above two matrices we get the following result
►
►
►
► Given matrices cannot be multiplied
Question No: 19 ( Marks: 1 ) - Please choose one
► 2x-3y=-6
► x+x+x
► 520x²y²
► y^2 -3=0
Question No: 20 ( Marks: 1 ) - Please choose one
► 4500 units
► 167 units
► 33 units
► 16 units
Question No: 21 ( Marks: 2 )
Solution:
Price = 2000
Discount rate = 12%
Discount = Price * rate
Discount = 2000*12/100
Discount = 240
Question No: 22 ( Marks: 3 )
Solution
compound interest = (1-((1.08)^6))*2250=1320
Question No: 23 ( Marks: 5 )
If the Basic salary of an employee is Rs 8000 and Allowances are Rs 4,000 . What are the cost on account of 20 casual and 10 sick leaves per year if normal working days per month are 26?
Solution:
Cost of casual leaves per year = {18 / (26 x 12)} x 12000 x 12 = 8307.7 Rs
Cost of Sick leaves per year = {12 / (26 x 12) x 12000 x 12 = 5538.5 Rs.
Question No: 24 ( Marks: 10 )
The series discounts are 20%, 10%, 5%.
What is the single equivalent discount rate?
if Invoice was dated May 1st and 10% discount is offered if invoice is paid up to 10thMay. What will be net payment for invoice value of Rs. 500,000 if paid up to 10th May.
Solution
List Price=500,000
D1=20%
D2=10%
D3=5%
Net price=N= L (1-d1)(1-d2)(1-d3)
= 500,000(1-0.20)(1-0.10)(1-0.05)
= 342,000
Single discounted rate is given by
Here we see N=L(1-d)
=500000(1-31.6%)
=342000
So we can say that …..31.6% is a single discounted rate
Payment over 10th of may= 500,000(1- 10%)
= 450,000
