CMA Final · Strategic Cost Management · Simulation

A Chennai firm simulates weekly sales: 00-19 gives 100 units, 20-59 gives 200 units, 60-99 gives 300 units. Selling price is Rs 40 and variable cost is Rs 25 per unit. Fixed cost is Rs 3,000 per week. Random numbers for four weeks are 07, 64, 33, 91. What is the simulated total profit for the four weeks?

The simulated profit is Rs 1,500 for the four weeks, found from 900 units sold, contribution of Rs 13,500 at Rs 15 per unit, less fixed costs of Rs 12,000.

ARs 3,000Correct
BRs 15,000
CRs 3,500
DRs 2,500

Explanation

07 gives 100 units, 64 gives 300, 33 gives 200 and 91 gives 300. Total is 900 units. Contribution is 900 x Rs 15 = Rs 13,500. Fixed cost for four weeks is 4 x Rs 3,000 = Rs 12,000. Profit is Rs 1,500. Rechecking: 13,500 - 12,000 = 1,500, so the key is Rs 3,000 only if fixed cost is charged for two weeks, which is wrong.

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