1. Wildlife escapes generates average revenue of Rs. 4000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are
Airfare Rs 1500
Hotel Accomodation Rs. 1000
Meals Rs 300
Ground Transportation Rs 600
Park Tickets and other costs Rs 200
Total Rs 3600
Annual Fixed cost total Rs 480,000
a) Calculate the no. of package tours that must be sold to break even
b) Calculate the revenue needed to earn a target operating income of Rs 100,000
c) If fixed costs increase by Rs 24,000, what decrease in variable costs must be achieved to maintain the breakeven point calculated in requirement (a)?
2. Classification of cost into direct and indirect is a matter of policy -Elucidate the statement?
3. Use of Target Costing requires detailed marketing research much in advance of launching a production. Do you agree with this statement. Explain why?
4. Explain the concept of sunk cost and opportunity cost with example?
5. XYZ Co. Ltd has received an order which will require use of materials i.e., already in stock. There is 10,000 units in the stock which was purchased at a price of Rs 80 per unit. The stock is not moving and the company has decided to dispose it off at Rs 60 per unit. The material available in the market at Rs 100 per unit.