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NED UNIVERSITY OF ENGINEERING & TECHNOLOGY

MASTER OF ENGINEERING MANAGEMENT (CONSTRUCTION MANAGEMENT &
WATER RESOURCES MANAGEMENT)
FALL SEMESTER EXAMINATION 2012
Time: 3 Hours Dated: 03-12-2012
Max. Marks: 60

ACCOUNTING & FINANCIAL MANAGEMENT- EM-502

Part A: Attempt any three (3) questions. All workings must be shown. 30

ABC Limited purchased a machinery for Rs. 5,000,000. Salvage value of the machinery is Rs. 500,000. 10
Calculate the Written Down Value (WDV) of the machine at the end of year 3 and 4 using the following
methods:

a) Straight line method with a useful life of 5 years.

b) WDV method at the rate of 20% per annum.

c) Sum of years digits method with a useful life of 5 years.

Following data is extracted from the store ledger of Star Ltd for the month of June 20X2. 10

Opening stock 5000 units @ Rs. 11 per unit

Purchases 3000 units @ Rs. 13 per unit
Purchases 1000 units @ Rs. 14 per unit
Issues 4000 units
Purchases 2000 units @ Rs. 12 per unit
Issues 3000 units

Calculate the value of closing stock using weighted average cost formula both for periodic and
perpetual method.

10

Opening Stock Closing Stock

Rs. Rs.

Materials 200,000 225,000

Work in process 125,000 145,000
Finished goods 400,000 380,000
Rs.
Material purchased 580,000
Direct labor 525,000
Factory overhead 230,000
Marketing and admin expenses 100,000
Sales 1,900,000

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 Required

a) Prime cost
b) Conversion cost
c) Cost of goods manufactured
d) Cost of goods sold
e) Income from operations

First Chance (Pvt) Limited manufactures and sells battery operated fans. Price of the fan is Rs. 100. 10
Following is the detail of other expenses:
C0d

Cost of goods sold per unit Rs. 60

Selling expenses per unit Rs.5 \. 40,000
Admin expenses
Financial charges Rs. 10,000 \) What is company's contribution margin per un

b) What is the break-even point in units.

c) If the company wants to earn a profit of Rs. 100,000, what is the number of units it must sell.

Sigma (Pvt) Limited 10

Balance sheet as at June 30,2012

Rs. Rs.
Assets Liabilities & Equity

Fixed assets 3,000,000 Owners equity 2,300,000

(100,000 shares)
Current assets Liabilities

Long term loan 1,000,000

Stock
Debtors/ Receivables Current Liabilities
Prepayments
Cash and bank Creditors
Current portion of loan

Total Assets 4,000,000 Total Equity & Liabilities

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 Safe (PVT) limited is planning to undertake a new project which involves investment in the machinery 15
costing Rs. 10,000,000. Life of the project will be 4 years after which machinery will be sold at Rs.
1,000,000. Yearly cash flows of the project will be as follows:

Yearl 2,000,000
Year 2 4,000,000
YearS 5,000,000
Year 4 6,000,000

Safe (Pvt) Limited will finance the project equally with debt and equity. Pretax cost of debt is 12%
whereas the cost of equity is 10%. Rate of tax is 35%.

Calculate the following

a) NPVofthe project.
b) Pay back period
c) Discounted pay back period.
d) Profitability index.

Q-8 Following trial balance is extracted from the books of Moon Limited, as at December 31, 20X0. 15
•
. .
Rs. Rs.
Vehicles 5,000,000 Share capital 4,500,000
Furniture and fixtures 1,000,000 Long term loan 1,000,000
Inventory 600,000 Creditors 350,000
Prepayments 300,000 Sales 5,000,000
Loans and advances 200,000
Debtors 400,000
Cash in hand 50,000
Cash at Bank 250,000
Purchases 2,500,000
Admin expenses 300,000
Selling expense 200,000
Interest on long term loan 50,000

10,850,000 10,850,000

Closing stock as at December 31 is Rs. 400,000.

Current portion of the long term loan is 200,000.

Prepare the Balance sheet and Profit and Loss account of Moon Limited for the year ended December
31, 20X0.

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 Sigma (Pvt) Limited
Profit & Loss Account
For the Year Ended June 30, 2012

Rs.

Sales 3,500,000

Cost of goods sold 2,000,000

Gross profit 1,500,000

Selling expenses 200,000

Admin expenses 300,000
500,000

Operating profit 1,000,000

Financial charges 200,000

Net profit 800,000

Calculate the following ratios.

a) Current Ratio
b) Return on equity
c) Earning per share (EPS)
d) Book value
e) Net profit margin

Part B: Attempt any two (2) questions. All workings must be shown. 30

©.Qsb Tri-Star Limited is evaluating a project which needs an initial investment of Rs. 5,000,000. Project life 15
* will be 5 years, with the yearly profits as follows:

Yearl 600,000
Year 2 700,000
Year 3 900,000
Year 4 1,000,000
Years 1,200,000

Above profits include charge of depreciation of Rs. 600,000 per year. Cost of capital is 12%. Calculate
the following.

a) NPVof the project

b) IRR of the project.

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