The Institute of Chartered Financial Analysts of India University 2011 C.A Chartered Accountant Chartered Accountancy -Pcc - Mock Test Series 1 - Question Paper

available on its flights. An analyst has collected the subsequent information:
Seating capacity per plane 360
avg. Passengers per flight 100
Flights per week 4
Flights per year 208
avg. one-way fare Rs. 10,000
Variable fuel costs Rs. 1,40,000 per flight
Food service to passengers (not charged to passengers) Rs. 400 per passenger
Commission paid to travel agents paid by DECCAN
Airways on every ticket booked on DECCAN Airways
(Assume that all DECCAN tickets are booked by
8% of fare
travel agents)
Fixed annual lease costs allocated to every flight Rs. 5,30,000 per flight
Fixed ground services (maintenance, check-in baggage
handling) costs allocated to every flight Rs. 70,000 per flight
Fixed salaries of flights crew allocated to every flight Rs. 40,000 per flight
For the sake of simplicity, presume that fuel costs are unaffected by the true
number of passengers on a flight.
Required:
(a) What is the operating income that DECCAN Airways makes on every oneway
flight ranging from Bangalore and New Delhi?
(b) The market research department of DECCAN Airways shows that
lowering the avg. one-way fare to Rs. 9,600 will increase the avg.
number of passengers per flight to 106. Should DECCAN Airways lower its
fare?
(c) Travel India, a tour operator, approaches DECCAN Airways to charter its jet
aircraft twice
every month, 1st to take Travel India International tourists from Bangalore to
New Delhi and then bring the tourists back from New Delhi to
Bangalore. If DECCAN Airways accepts the offer, it will be able to offer
only 184 (208 minus 24) of its own flights every year. The terms of the
charter are:
(i) For every one-way flight Travel India will pay DECCAN Rs. 7,50,000 to
charter the plane and to use its flight crew and ground service staff.
(ii) Travel India will pay for fuel costs.
(iii) Travel India will pay for all food costs.
On purely financial considerations, should DECCAN Airways accept the
offer from Travel India Tours and Travel?
9. (a) You are provided the subsequent data for the coming year for a factory.
Budgeted output 8,00,000 units
Fixed expenses 40,00,000
Variable expenses per unit Rs. 10
Selling price per unit Rs. 20
Draw a break-even chart showing the break-even point.
(b) If price is decreased to Rs. 180, what will be the new break-even point?
10. The subsequent standards have been set to manufacture a product:

Earning:   Approval pending.