08r05310301 Managerial Economics and Financial Analysis

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Code No: R05310301 Set No. 1

III B.Tech I Semester Supplimentary Examinations, February 2008
MANAGERIAL ECONOMICS AND FINANCIAL ANALYSIS
( Common to Mechanical Engineering, Electronics & Communication
Engineering, Computer Science & Engineering, Information Technology,
Electronics &Computer Engineering, Computer Science & Systems
Engineering, Automobile Engineering, Production Engineering,
Instrumentation & control Engineering,Electronics & Telematics
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Engineering)
Time: 3 hours Max Marks: 80
Answer any FIVE Questions
All Questions carry equal marks
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1. Managerial Economics is the application of Economic Theory to business manage-

ment. Discuss. [16]
2. (a) What do you understand by Elasticity of demand. How is it classified.

(b) Determine price elasticity of demand given that the quantity demanded of a
product is 1000 units when the price is Rs. 100 and when the price declines
to Rs.90, demand increases to 1500 units. [8+8]
3. (a) Define and explain diminishing returns to variable factor and why does it
happen?
(b) Use suitable diagrams in support of your answer. [10+6]
4. (a) What are the principal differences between monopoly and perfect competition?
(b) Supplement your answer with appropriate diagrams in both the cases. [8+8]
5. Evaluate the partnership form of business organization. How does it overcome the
limitations of sole trading? [16]
6. What is the importance of capital budgeting? Explain the basic steps involved in
evaluating capital budgeting proposals. [16]
7. The following trial balance belongs to Bala Krishna as on 31st December 2004.
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Prepare a trading, profit and loss account and balance sheet. [16]
Debit Rs. CreditRs.

Purchases and Sales 1,65,625 2,56,650
Sales returns and Purchase returns 4,250 2,120
Sundry debtors & Creditors 40,200 30,720
Bills receivable and Bills payable 26,720 20,625
Opening stock 1,20,500
Wages 35,000
Fuel and power 10,500
Postage and stationery 5,750
Trade expenses 7,500
Interest received 9,500
Bad debts 4,500
Drawings and capital 10,000 1,10,930
4,30,545 4,30,545
Adjustments
(a) Closing stock was valued at Rs.95,000

(b) Wages were outstanding by Rs. 5,000
(c) Outstanding interest receivable Rs.500.
8. (a) From the following information, calculate [16]

i. Debt ? Equity ratio
ii. Current ratio
Rs. Rs.
Debentures 1,40,000 Bank balance 30,000
Long term loans 70,000 Sundry Debtors 70,000
General reserve 40,000
Creditors 66,000
Bills payable 14,000
Share capital 1,20,000
(b) Calculate Interest Coverage ratio from the following information.
Rs.
Net profit after deducting interest and taxes 6,00,000
12% Debentures of the face value of 15,00,000
Amount provided towards taxation 1,20,000
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Electronics &Computer Eng ineering, Computer Science & Systems
Engineering)
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1. Managerial Economics is the application of Economic Theory to business manage-

ment. Discuss. [16]
2. What are the needs for demand forecasting. Explain the various steps involved in
demand forecasting. [16]
3. If Selling Price Per Unit Rs.12, Variable Cost Per Unit Rs.8, Fixed Cost Rs.40000
Find out
(a) Break Even sales units and value

(b) profit when sales are Rs.300000
(c) Margin of Safety when sales are Rs.350000. [16]
4. Write short notes on the following:
(a) Product differentiation

(b) Market skimming
(c) Super normal profits
(d) shut down price. [4×4]
5. Explain the features of sole trader form of organization. Discuss the merits and
demerits of sole trader form of organization. [16]
6. Are there any considerations other than profitability to be made in managerial

decisions about investment proposals? Explain them. [16]
7. The trial balance of Bharat is given below. Prepare the Trading and Profit & Loss
A/c for the year ending 31st December, 2005 and Balance sheet as on that date.
[16]

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Debit. Rs Credit. Rs.
Drawings and Capital 10,550 1,19,400
Plant & Machinery 38,300
Sundry debtors and creditors 62,000 59,360
Wages 43,750
Purchases and Sales 2,56,590 3,56,430
Opening stock 95,300
Salaries 12,880
Insurance 930
Cash at bank 18,970
Interest on loan 14,370
Discounts allowed 4,870
Furniture 12,590
Loan payable 79,630
Furniture 43,990
6,15,090 6,15,090
Closing stock was valued at Rs.90,000.

ii. Current ratio
Rs. Rs.
Creditors 66,000
Rs.
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Engineering)
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1. Managerial economics is a multi dimensional discipline ? Explain. [16]
2. Explain Income Elasticity of demand and its significance in making business deci-
sions.
[16]
3. (a) With a neat diagram represent [8]

i. Angle of incidence
ii. Margin of safety in sales volume
(b) From the following figures you are required to calculate: [8]
i. P/V Ratio
ii. Break-Even Sales Volume
iii. Margin of Safety and
iv. Profit.
Sales Rs.4000,
Variable Cost Rs.2000, Fixed Cost Rs.1600
4. (a) Define Market and explain how markets are classified?

(b) What are the important features in any market structure? [12+4]
5. “Company form of organization is essential for the development of industrial sector

in India” Support this statement with suitable Justifications. [16]
6. Explain the concept of capital budgeting and what is its practical utility? [16]
7. The following are the particulars of Ledger Account balances taken from the books
of Bhaskar for the year ending 31st March 2005. You are required to prepare the

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Trading and profit and Loss A/c and Balance sheet. [16]
Rs. Rs.
Bills receivable and Bills payable 4,00,000 7,00,000
Debtors and Creditors 75,000 50,000
Cash on hand 15,000
Cash at bank 25,000
Business premises 2,50,000
Loans payable 25,000
Opening stock 40,000
Purchases and purchase returns 60,000 8,000
Sales returns and sales 37,000 2,75,000
Wages 35,000
Salaries 65,000
Rent, Taxes and Insurance 15,000
Depreciation 5,000
Furniture 78,000
Advertisement 58,000
Capital 1,00,000
11,58,000 11,58,000
Adjustments:
(a) Closing stock was valued at Rs. 80,000
(b) Write off Bad Debts of Rs.5 ,000 out of sundry debtors
(c) Prepaid insurance amounted Rs.1,000.
ii. Current ratio
Rs. Rs.
Creditors 66,000
Rs.
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Engineering)
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1. Write short notes on:
(a) Demand Function

(b) Complementary goods and demand
(c) Substitution effect
(d) Inferior goods [16]
2. Explain Income Elasticity of demand and its significance in making business deci-
sions.
[16]
3. “Break even analysis provides the management with a simplified framework for an
organization which is thinking on a number of problems” ? Discuss. [16]
4. (a) What are the causes for the formulation of monopoly?
(b) Discuss how the monopolist can formulate output and pricing decisions in the
short run period? [8+8]
5. Explain the features of sole trader form of organization. Discuss the merits and
demerits of sole trader form of organization.
6. Explain different types of working capital.

[16]
7. Give a brief account on the important records of Accounting under Double entry
[16]
system and discuss briefly the scope of each. [16]

ii. Current ratio

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Rs. Rs.
Creditors 66,000
Rs.
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www.andhracolleges.

com The Complete Information About Colleges in Andhra Pradesh

Code No: R05310301 Set No. 1

1. Managerial Economics is the application of Economic Theory to business manage-

2. (a) What do you understand by Elasticity of demand. How is it classified.

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www.andhracolleges.com Engineering-MBA-MCA-Medical-Pharmacy-B.Ed-Law Colleges Information

Code No: R05310301 Set No. 1

Debit Rs. CreditRs.

(a) Closing stock was valued at Rs.95,000

8. (a) From the following information, calculate [16]

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Code No: R05310301 Set No. 2

1. Managerial Economics is the application of Economic Theory to business manage-

(a) Break Even sales units and value

(a) Product differentiation

6. Are there any considerations other than profitability to be made in managerial

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Code No: R05310301 Set No. 2

8. (a) From the following information, calculate [16]

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Code No: R05310301 Set No. 3

1. Managerial economics is a multi dimensional discipline ? Explain. [16]

3. (a) With a neat diagram represent [8]

4. (a) Define Market and explain how markets are classified?

5. “Company form of organization is essential for the development of industrial sector

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Code No: R05310301 Set No. 3

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Code No: R05310301 Set No. 4

1. Write short notes on:

(a) Demand Function

6. Explain different types of working capital.

system and discuss briefly the scope of each. [16]

8. (a) From the following information, calculate [16]

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Code No: R05310301 Set No. 4

www.andhracolleges.com Engineering-MBA-MCA-Medical-Pharmacy-B.Ed-Law Colleges Information

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