MIT School of Business Assignment No.

.03 Accounting for Managers PIECO ENGINEERING COMPANY HAS RECEIVED AN ONCE-OFF EXPORT ORDER FOR ITS SOLE PRODUCT THAT WOULD REQUIRE THE USE OF HALF OF THE FACTORYS TOTAL CAPACITY, WHICH IS ESTIMATED AT 4LAKH UNITS PER ANNUM. THE CONDITION OF THE EXPORT ORDER IS THAT IT HAS TO BE ACCEPTED IN FULL: ACCEPTANCE OF PART QUANTITY IS NOT ALLOWED. THE FACTORY IS CURRENTLY OPERATING AT 60% LEVEL TO MEET THE DEMAND OF ITS DOMESTIC CUSTOMERS. AS AGAINST THE CURRENT PRICE OF RS.6.00 PER UNIT, THE EXPORT OFFER IS RS . 4.70 PER UNIT, WHICH IS LESS THAN THE TOTAL COST OF CURRENT PRODUCTION . THE COST BREAKDOWN IS GIVEN BELOW: (RS. PER UNIT) DIRECT MATERIAL DIRECT LABOUR VARIABLE EXPENSES FIXED OVERHEAD TOTAL COST 2.50 1.00 0.50 1.00 5.00

THE COMPANY HAS THE FOLLOWING OPTIONS : (A) ACCEPT THE EXPORT ORDER AND CUT BACK DOMESTIC SALES AS NECESSARY (B) REMOVE THE CAPACITY CONSTRAINT BY INSTALLING NECESSARY BALANCING EQUIPMENT AND ALSO BY WORKING OVERTIME TO MEET BOTH DOMESTIC AND EXPORT DEMAND. THIS WILL INCREASE THE FIXED OVERHEADS BY RS. 15000 ANNUALLY, AND ADDITIONAL COST FOR OVERTIME WORK WILL AMOUNT TO RS. 40,000 FOR THE YEAR. (C) APPOINT A SUBCONTRACTOR TO MANUFACTURE THE ADDITIONAL REQUIREMENT AND MEET THE DOMESTIC AND EXPORT REQUIREMENT IN FULL BY SUPPLYING RAW MATERIALS, PAYING A CONVERSION CHARGE @ RS. 2.00 PER UNIT AND APPOINTING A SUPERVISOR AT A SALARY OF RS.3,000 PER MONTH FOR CHECKING THE QUALITY OF THE PRODUCT AND CONTROLLING OPERATIONS AT THE MANUFACTURING UNIT. (D) REFUSE THE ORDER. REQUIRED (I) A STATEMENT OF COSTS AND PROFITS UNDER EACH OF THE ABOVE FOUR POINTS;

(II)

YOUR RECOMMENATION, WITH REASONS, AS TO WHICH OF THESE OPTIONS THE COMPANY SHOULD DECIDE UPON.

Managerial Economics Task 1: Please select an industry and a product of your choice. You have to prepare business plan by considering the following points. You are required to submit logical analysis along with the working sheets for all the below mentioned points. Given: capital Investment: Rs. One Crore. 1) Location of the plant 2) Market Study 3) Industry Analysis 4) Competitors Strategy 5) SWOT for your company 6) Pricing of the product 7) Manpower planning 8) Cost minimization 9) Break up of fixed and variable cost 10) Demand Forecasting 11) Elasticity and the strategy to increase the demand in the market. Task 2: Given Completed task 1: 1) Strategy in case of y Exchange rate of dollar depreciates to Rs. 50 y Inflation increases to 12% y GDP growth decreases to 7% y Interest cost increases to 15% Hint: You are required to make use of all subjects which you have studied in semester 1 with more emphasis on classroom learning of Business Economics. Best Assignment award will be given in Annual Social Gathering.

Human Dynamics Make a list of cultural Dos and Donts (related to corporate world) of the following countries: 1. India 2. U.S 3. UK 4. China 5. Australia 6. Gulf Countries

Marketing Management Carry out a market survey using a suitable questionnaire for estimating the demand, for the year 2011, for the product handled in earlier assignments.

Statistics & Research Methodology Companies from the same sector performs in a similar way. Prove or disprove this claim by collecting data from different companies from specific sector for appropriate time period. This assignment is to be submitted in the following format. 1. 2. 3. 4. 5. 6. 7. Hint: i) ii) Use ANOVA Data can be collected from financial newspapers, magazines, internet, CMIE database etc. The hypothesis to be tested Sector selected Companies selected Time period for data collection Analysis tables Graphs if any Conclusion