Engineering Economics - H. Agarwal

Scilab Textbook Companion for
Engineering Economics
by H. Agarwal1
Created by
Mohd Arif
B.Tech
Computer Engineering
Uttarakhand Technical University
College Teacher
Arshad Khan
Cross-Checked by
Lavitha Pereira
August 13, 2013
1 Funded
by a grant from the National Mission on Education through ICT,

http://spoken-tutorial.org/NMEICT-Intro. This Textbook Companion and Scilab
codes written in it can be downloaded from the Textbook Companion Project
section at the website http://scilab.in
Book Description
Title: Engineering Economics
Author: H. Agarwal
Publisher: Anand Publications
Edition: 1
Year: 2010
ISBN: 978-93-80225-47-0
Scilab numbering policy used in this document and the relation to the
above book.
Exa Example (Solved example)
Eqn Equation (Particular equation of the above book)
AP Appendix to Example(Scilab Code that is an Appednix to a particular
Example of the above book)
For example, Exa 3.51 means solved example 3.51 of this book. Sec 2.3 means
a scilab code whose theory is explained in Section 2.3 of the book.
Contents
List of Scilab Codes
1 Time Value of Money
2 Simple and compound interest
19
4 Capital Budgeting
27
5 Analysis of public projects
59
8 Product Process and Operation Costing
64
9 standard costing
91
List of Scilab Codes

Exa
Exa
Exa
Exa
Exa
Exa
Exa
1.1
1.2
1.3.a
1.3.b
1.4
1.5
1.6.1
Exa 1.6.2
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
1.6.3
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
2.1
2.2
2.3
2.4
2.5.a
2.5.b
Calculate compound interest . . . . . . . . . . . . . .

Calculate Doubling Time . . . . . . . . . . . . . . . .
calculate compound value on yearly basis . . . . . . .
calculate compound value on quarterly basis . . . . . .
calculate compounded Amount . . . . . . . . . . . . .
calculate compounded amount received by child . . . .
Calculate Effective rate of interest compounding half
yearly . . . . . . . . . . . . . . . . . . . . . . . . . . .
Calculate Effective rate of interest compounding half
quarterly . . . . . . . . . . . . . . . . . . . . . . . . .
Calculate Effective rate of interest compounding monthly
Find out rate of interest . . . . . . . . . . . . . . . . .
Calculate future value . . . . . . . . . . . . . . . . . .
Calculate future value . . . . . . . . . . . . . . . . . .
Find the compounded Amount . . . . . . . . . . . . .
Calculate present value . . . . . . . . . . . . . . . . .
Calculate how much amount should be deposited today
Calculate borrowed sum . . . . . . . . . . . . . . . . .
Calculate present value of a series of unequal cashflows
Calculate ammount of each instalment . . . . . . . . .
Calculate annual payment . . . . . . . . . . . . . . . .
Calculate size of instalment . . . . . . . . . . . . . . .
Calculate compound interest . . . . . . . . . . . . . .
Find compound interest . . . . . . . . . . . . . . . . .
Find the ammount and compounded interest . . . . .
Find the time . . . . . . . . . . . . . . . . . . . . . . .
Find compound interest reckoned quarterly . . . . . .
Find compound interest reckoned half yearly . . . . .
4
7
7
8
9
9
10
10
11
11
12
12
13
13
14
15
15
16
16
17
17
19
19
20
21
21
22
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
2.5.c
2.6
2.7
2.8
2.9
2.10
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13.1
4.13.2
4.13.3
4.13.4
4.13.5
4.14.1
4.14.2
4.14.3
4.14.4
4.14.5
5.2
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
5.3
8.1
8.2
8.3
8.4
8.5
8.6
8.7
Find compound interest reckoned yearly . . . . . . . .

Find compound interest . . . . . . . . . . . . . . . . .
Find the amount . . . . . . . . . . . . . . . . . . . . .
Find the time . . . . . . . . . . . . . . . . . . . . . . .
Find the principal amount . . . . . . . . . . . . . . . .
Calculate simple interest . . . . . . . . . . . . . . . . .
Calculate payback period . . . . . . . . . . . . . . . .
Find average investment . . . . . . . . . . . . . . . . .
Calculate accounting rate of return . . . . . . . . . . .
Calculate average rate of return . . . . . . . . . . . . .
Determine average rate of return . . . . . . . . . . . .
Appraise profitability of proposed investment . . . . .
Calculate internal rate of return . . . . . . . . . . . .
Discuss according to internal rate of return . . . . . .
Calculate average rate of return . . . . . . . . . . . . .
Calculate Net present value . . . . . . . . . . . . . . .
Calculate profitability index . . . . . . . . . . . . . . .
Compute payback period . . . . . . . . . . . . . . . .
Compute average rate of return . . . . . . . . . . . . .
Compute Net present value . . . . . . . . . . . . . . .
Calculate profitability index . . . . . . . . . . . . . . .
Demonstrate use of annual present and future worth
operation . . . . . . . . . . . . . . . . . . . . . . . . .
Calculate the BC ratio . . . . . . . . . . . . . . . . . .
Process account and Abnormal Loss Acount . . . . . .
Equivalent Production . . . . . . . . . . . . . . . . . .
Calculation of effective production and process cost sheet
Calculation of effective production and process account
Process accounts . . . . . . . . . . . . . . . . . . . . .
Various process account and finished stock account . .
Process account and Abnormal wastage and gain . . .
5
23
23
24
24
25
25
27
27
28
29
32
32
33
34
37
38
39
40
42
44
45
46
47
49
50
52
54
55
59
62
64
65
66
69
71
73
75
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
Exa
8.8
8.9
8.10
8.11
8.12
8.13
9.1
9.2
9.3
9.4
9.5
9.6
9.7.a
9.7.b
9.7.c
9.7.d
9.7.e
9.8
9.9
9.10
9.11
9.12
9.13
9.14
9.15
9.16
9.17
9.18
9.19
9.21
9.22
Computation of Equivalent and analysis of Cost sheet

78
Output transfered and closing and opening work in progress 81
Closing Inventory and material transfered . . . . . . .
83
Process account and Unrealised profit . . . . . . . . .
84
Process account and statement of profit . . . . . . . .
86
Labour cost and value of work in progress . . . . . . .
88
Calculate material variances . . . . . . . . . . . . . . .
91
92
92
93
94
Calculate material variances when mix ratio is same .
96
Calculate material cost variances . . . . . . . . . . . .
97
Calculate material usage variance . . . . . . . . . . . .
98
Calculate material price variance . . . . . . . . . . . .
99
Calculate material mix variance . . . . . . . . . . . . . 100
Calculate material sub usage variances . . . . . . . . . 101
Calculate material variances . . . . . . . . . . . . . . . 102
Calculate labour variances . . . . . . . . . . . . . . . . 110
Calculate idle time variances . . . . . . . . . . . . . . 112
Calculate idle time variances . . . . . . . . . . . . . . 113
Chapter 1
Time Value of Money
Scilab code Exa 1.1 Calculate compound interest

1
2
3
4
5
6
7
8
9
10
11
12
13
14
// Exa1
clc ;
clear ;
close ;
// g i v e n d a t a :
Vo =500; // i n Rs
r =5; // i n % p e r annum
i = r /100;
n =3; // i n y e a r s
// f o r m u l a Vn=Vo(1+ i ) n
V3 = Vo *(1+ i ) ^ n ;
disp ( V3 , f u t u r e v a l u e a f t e r t h r e e y e a r s : )
CI = V3 - Vo ;
disp ( CI , compound i n t e r e s t i s
: )
Scilab code Exa 1.2 Calculate Doubling Time

1
// Exa2
7
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 i =6; // i n % p e r annum
7 // we know r u l e o f 72
8 disp ( A c c o r d i n g t o Rule o f 72 :
d o u b l i n g p e r i o d =72/(
r a t e o f i n t e r e s t ) );
9 doublingperiod =72/ i ;
10 disp ( doublingperiod , D o u b l i n g p e r i o d ( i n y e a r s ) : ) ;
11
12
13
14
// we know r u l e o f 69
disp ( A c c o r d i n g t o Rule o f 69 : d o u b l i n g p e r i o d
=0.35+69/( r a t e o f i n t e r e s t ) ) ;
15 doublingperiod =0.35+69/ i ;
16 disp ( doublingperiod , D o u b l i n g p e r i o d ( i n y e a r s ) : ) ;
Scilab code Exa 1.3.a calculate compound value on yearly basis

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
// Exa3a
clc ;
clear ;
close ;
Vo =1000; // i n Rs
i = r /100;
t =3; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n y e a r l y b a s i s
n=t;
Vn = Vo *(1+ i ) ^ n ;
disp ( Vn , The compound v a l u e ( i n Rs . ) : )
// The a n s i n t h e book i s wrong
8
16
disp ( Note : The a n s i n t h e book i s wrong )
Scilab code Exa 1.3.b calculate compound value on quarterly basis

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
// Exa3b
clc ;
clear ;
close ;
Vo =1000; // i n Rs
i = r /100;
t =3; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n q u a r t e r l y b a s i s
n =4* t ;
i = i /4;
Vn = Vo *(1+ i ) ^ n ;
disp ( Vn , The compound v a l u e ( i n Rs . ) : )
Scilab code Exa 1.4 calculate compounded Amount

1
2
3
4
5
6
7
8
9
10
11
// Exa4
clc ;
clear ;
close ;
Vo =500; // i n Rs
i = r /100;
n =5; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n q u a r t e r l y b a s i s
m =4;
9
12 // f o r m u l a Vn=Vo(1+ i /m) (mn )

13 Vn = Vo *(1+ i / m ) ^( m * n )
14 disp ( Vn , The amount w i l l be ( i n Rs . ) : )
15 // Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
Scilab code Exa 1.5 calculate compounded amount received by child

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
// Exa5
clc ;
clear ;
close ;
Vo =5000; // i n Rs
i = r /100;
//On 6 t h y e a r means amount d e p o s i t e d f o r 5 y e a r s
n =5; // i n y e a r s
// i n t e r e s t i s c a l c u l a t e d i n H a l f y e a r l y b a s i s
m =2;
// f o r m u l a Vn=Vo(1+ i /m) (mn )
Vn = Vo *(1+ i / m ) ^( m * n )
disp ( Vn , A f t e r c o m p l e t i n g 5 y e a r s i . e , on i t s 6 t h
year c h i l d
w i l l r e c i e v e ( i n Rs . ) : )
Scilab code Exa 1.6.1 Calculate Effective rate of interest compounding

half yearly
1 // Exa 6 ( i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 r =9; // i n % p e r annum
10
7 i = r /100;
8 // componding i s done h a l f y e a r l y
9 m =2;
10 // f o r m u l a EIR=(1+ i /m) m1;
11 EIR =(1+ i / m ) ^m -1;
12 %EIR =100* EIR ;
13 disp ( %EIR , H a l f y e a r l y EIR ( i n %) : ) ;

half quarterly
1
2
3
4
5
6
7
8
9
10
11
12
13
// Exa 6 ( i i )
clc ;
clear ;
close ;
i = r /100;
// componding i s done q u a r t e r l y
m =4;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
%EIR =100* EIR ;
disp ( %EIR , Q u a r t e r l y EIR ( i n %) : ) ;

monthly
1 // Exa 6 ( i i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
11
6
7
8
9
10
11
12
13
i = r /100;
// componding i s done monthly
m =12;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
%EIR =100* EIR ;
disp ( %EIR , Monthly EIR ( i n %) : ) ;
Scilab code Exa 1.7 Find out rate of interest

1
2
3
4
5
6
7
8
9
10
11
12
13
14
// Exa7
clc ;
clear ;
close ;
Vo =100; // i n Rs
Vn =200; // i n Rs
n =7; // i n y e a r s
m =2; // f o r h a l f y e a r l y compounding
// f o r m u l a Vn=Vo(1+ i /m) (mn )
// s o l v i n g f o r i g i v e s
i = m *( %e ^(( log ( Vn / Vo ) ) /( m * n ) ) -1) ;
r = i *100;
disp (r , The r a t e o f i n t e r e s t ( i n % p e r annum ) i s
)
Scilab code Exa 1.8 Calculate future value

1 // Exa8
2 clc ;
3 clear ;
4 close ;
12
R1 =5000; // i n Rs
R2 =10000; // i n Rs
R3 =15000; // i n Rs
R4 =10000; // i n Rs
R5 =8000; // i n Rs
i = r /100;
n =5; // i n y e a r s
// f o r m u l a Vn=R1(1+ i ) ( n 1)+R2(1+ i ) ( n 2)
+ . . . . . . . . . . . . . + Rn1(1+ i )+Rn
15 V5 = R1 *(1+ i ) ^( n -1) + R2 *(1+ i ) ^( n -2) + R3 *(1+ i ) ^( n -3) + R4
*(1+ i ) ^( n -4) + R5 ;
16 disp ( V5 , The f u t u r e v a l u e o f t h i s s e r i e s o f payments
( i n Rs ) w i l l be : )
5
6
7
8
9
10
11
12
13
14
Scilab code Exa 1.9 Calculate future value

1
2
3
4
5
6
7
8
9
10
11
12
13
// Exa9
clc ;
clear ;
close ;
A =1000; // i n Rs
i = r /100;
n =12; // i n y e a r s
// f o r m u l a FVA=(A(1+ i ) n 1) / i ;
FVA =( A *((1+ i ) ^n -1) ) / i ;
disp ( FVA , The f u t u r e v a l u e ( i n Rs . ) i s : )
// Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
Scilab code Exa 1.10 Find the compounded Amount

13
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
// Exa10
clc ;
clear ;
close ;
i = r /100;
// componding i s done h a l f y e a r l y
m =2;
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
// c a l c u l a t i n g FVA t a k i n g i =EIR ;
// f o r m u l a FVA=(A(1+ i ) n 1) / i ;
A =100; // i n Rs
n =18; // i n y e a r s
i = EIR ;
FVA =( A *((1+ i ) ^n -1) ) / i ;
disp ( FVA , F u t u r e V a l u e o f amount ( i n Rs ) : ) ;
// Note : a n s w e r g i v e n i n t h e book i s n o t a c c u r a t e
Scilab code Exa 1.11 Calculate present value

1
2
3
4
5
6
7
8
9
10
11
12
// Exa11
clc ;
clear ;
close ;
Vn =5000; // i n Rs
i = r /100;
n =5; // i n y e a r s
// f o r m u l a f o r p r e s e n t v a l u e Vo=Vn/(1+ i ) n
Vo = Vn /(1+ i ) ^ n ;
disp ( Vo , P r e s e n t v a l u e i s : )
14
Scilab code Exa 1.12 Calculate how much amount should be deposited
today
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
// Exa12
clc ;
clear ;
close ;
Vn =15000; // i n Rs
i = r /100;
n =5; // i n y e a r s
m =2; // f o r h a l f y e a r l y compounding
// f o r m u l a EIR=(1+ i /m) m1;
EIR =(1+ i / m ) ^m -1;
// f o r m u l a f o r p r e s e n t v a l u e Vo=Vn/(1+ i ) n
// t a k i n g i =EIR ;
i = EIR ;
Vo = Vn /(1+ i ) ^ n ;
disp ( Vo , P r e s e n t v a l u e i s : )
Scilab code Exa 1.13 Calculate borrowed sum

1
2
3
4
5
6
7
8
9
// Exa13
clc ;
clear ;
close ;
R1 =676; // i n Rs
R2 =676; // i n Rs
i = r /100;
15
10 n =2; // i n y e a r s
11 // f o r m u l a f o r p r e s e n t v a l u e o f
s e r i e s payments V0=R1
/(1+ i ) ( 1 )+R2/(1+ i ) ( 2 ) + . .
12 Vo = R1 /(1+ i ) ^(1) + R2 /(1+ i ) ^(2) ;
13 disp ( Vo , The b o r r o w e d sum i s : )
Scilab code Exa 1.14 Calculate present value of a series of unequal cashflows
// Exa14
clc ;
clear ;
close ;
R1 =5000; // i n Rs
R2 =10000; // i n Rs
R3 =10000; // i n Rs
R4 =3000; // i n Rs
R5 =2000; // i n Rs
i = r /100;
n =5; // i n y e a r s
// f o r m u l a f o r p r e s e n t v l u e o f s e r i e s payments PV=R1
/(1+ i ) ( 1 )+R2/(1+ i ) ( 2 ) + . . . . . . . . . . . . . + Rn/(1+ i ) n ;
15 PV = R1 /(1+ i ) ^(1) + R2 /(1+ i ) ^(2) + R3 /(1+ i ) ^(3) + R4 /(1+ i )
^4+ R5 /(1+ i ) ^5;
16 disp ( PV , P r e s e n t v a l u e i s : )
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Scilab code Exa 1.15 Calculate ammount of each instalment

1 // Exa15
2 clc ;
3 clear ;
16
4
5
6
7
8
9
10
close ;
Vo =20000; // i n Rs
i = r /100;
n =10; // i n y e a r s
// f o r m u l a f o r a n n u i t y can be d e t e r m i n e d by Vo=(A
((1+ i ) n1) ) / ( i ((1+ i ) n ) ) ;
11 A =( Vo *( i *((1+ i ) ^ n ) ) ) /((1+ i ) ^n -1)
12 disp (A , The amount o f e a c h i n v e s t m e n t ( i n Rs ) i s : )
Scilab code Exa 1.16 Calculate annual payment

// Exa16
clc ;
clear ;
close ;
Vn =500000; // i n Rs
i = r /100;
n =5; // i n y e a r s
// Formula f o r n e e d e d a n n u a l payment R=(Vn i ) /((1+ i )
n 1) ;
11 R =( Vn * i ) /((1+ i ) ^n -1) ;
12 disp (R , R e q u i r e d v a l u e ( i n Rs ) : )
1
2
3
4
5
6
7
8
9
10
Scilab code Exa 1.17 Calculate size of instalment

1 // Exa17
2 clc ;
17
3
4
5
6
7
8
9
10
clear ;
close ;
Vo =200000; // i n Rs
i = r /100;
n =5; // i n y e a r s
// Formula f o r s i z e o f i n s t a l l m e n t can be c a l c u l a t e d
by Vo=(A((1+ i ) n1) ) / ( i (1+ i ) n ) ;
11 A =( Vo *( i *(1+ i ) ^ n ) ) /((1+ i ) ^n -1) ;
12 disp (A , R e q u i r e d v a l u e ( i n Rs ) : )
18
Chapter 2
Simple and compound interest
Scilab code Exa 2.1 Calculate compound interest

1
2
3
4
5
6
7
8
9
10
11
// Exa1
clc ;
clear ;
close ;
// g i v e n d a t a i s :
P =10000; // i n r u p e e s
n =3; // i n y e a r s
r =10; //% p e r annum
A = P *(1+ r /100) ^ n ;
CI =A - P ; // i n r u p e e s
disp ( Compound i n t e r e s t
)
i s : + string ( CI ) + Rupees .
Scilab code Exa 2.2 Find compound interest

1 // Exa2
2 clc ;
3 clear ;
19
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
close ;
// For f i r s t y e a r
P1 =500; // i n r u p e e s
n =3; // i n y e a r s
T =1 // i n y e a r
I1st =( P1 * r * T ) /100;
A1 = P1 + I1st ;
// For s e c o n d y e a r
P2 = A1 ;
I2nd =( P2 * r * T ) /100;
A2 = P2 + I2nd ;
// For t h i r d y e a r
P3 = A2 ;
I3rd =( P3 * r * T ) /100;
A3 = P3 + I3rd ;
// compound i n t e r e s t o r 3 y e a r s
CI = A3 - P1 ;
disp ( Compound i n t e r e s t i s : + string ( CI ) + Rupees .
)
Scilab code Exa 2.3 Find the ammount and compounded interest
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// Exa2
clc ;
clear ;
close ;
P =5000; // i n r u p e e s
n =3/2; // i n y e a r s
r =10/2; //% p e r annum p a i d h a l f y e a r l y
m =2; // f r e q o f compounding
A = P *(1+ r /100) ^( m * n ) ;
CI =A - P ; // i n r u p e e s
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Scilab code Exa 2.4 Find the time

1 // Exa4
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a i s :
6 n =3; // i n y e a r s
7 disp ( L e t P=x t h e n A=2x ) ;
8 disp ( L e t r% be t h e r a t e o f i n t e r e s t ) ;
9 // f o r m u l a : A=P(1+ r / 1 0 0 ) n ;
10 // p u t t i n g v a l u e s
11 disp ( 2 x=x (1+ r / 1 0 0 ) 3 ) ;
12 disp ( o r ) ;
13 disp ( 2=(1+ r / 1 0 0 ) 3 )
14 // on s o l v i n g t h i s eqn
15 r =((2^(1/3) ) -1) *100; // i n %
16 disp (r , r a t e i s c o m t u t e d : )
17 disp ( s u p p o s e i n n y e a r s t h e amount x w i l l become
16 x , t h e n by f o r m u l a )
18 // 16=(1+ r / 1 0 0 ) n ;
19 n = log (16) / log (1+ r /100) ;
20 disp ( Time i s : + string ( n ) + y e a r s ) ;
Scilab code Exa 2.5.a Find compound interest reckoned quarterly

1 // Exa5 ( a )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a
is :
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P =4000; // i n r u p e e s
N =9; // months
R =6; // i n % p e r annum
// i f i n t e r e s t i s r e c k o n e d q u a r t e r l y
r = R /4; // i n % p e r q u a r t e r , a s t h e r e a r e 4 q u a r t e r s i n
a year
n =( N /12) *4; // i n q u a r t e r s
Amount1 = P *(1+ r /100) ^ n ;
CI1 = Amount1 - P ;
disp ( CI1 , Compound i n t e r e s t w h i l e r e c k o n e d q u a r t e r l y
: )
// Ans i n t h e book i s n o t c o r r e c t
Scilab code Exa 2.5.b Find compound interest reckoned half yearly
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// Exa5 ( b )
clc ;
clear ;
close ;
P =4000; // i n r u p e e s
N =9; // months
// i f i n t e r e s t i s r e c k o n e d h a l f y e a r l y
r = R /2; // i n % p e r h a l f y e a r l y , a s t h e r e a r e 2 h a l f
years in a year
n =( N /12) *2; // i n h a l f y e a r s
Amount2 = P *(1+ r /100) ^ n ;
CI2 = Amount2 - P ;
disp ( CI2 , Compound i n t e r e s t w h i l e r e c k o n e d h a l f
y e a r l y : )
// Ans i n t h e book i s n o t c o r r e c t
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Scilab code Exa 2.5.c Find compound interest reckoned yearly

// Exa5 ( c )
clc ;
clear ;
close ;
P =4000; // i n r u p e e s
N =9; // months
// i f i n t e r e s t i s r e c k o n e d y e a r l y
r = R ; // i n % p e r annum
n =( N /12) ; // i n y e a r s
Amount3 = P *(1+ r /100) ^ n ;
CI3 = Amount3 - P ;
disp ( CI3 , Compound i n t e r e s t w h i l e r e c k o n e d y e a r l y :
)
15 // Ans i n t h e book i s n o t c o r r e c t
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Scilab code Exa 2.6 Find compound interest

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// Exa6
clc ;
clear ;
close ;
P =10000; // i n r u p e e s
N =3; // y e a r s
r1 =4; // i n % p e r annum f o r 1 s t y e a r
r2 =5; // i n % p e r annum f o r 2 nd y e a r
r3 =10; // i n % p e r annum f o r 3 r d y e a r
A = P *(1+ r1 /100) *(1+ r2 /100) *(1+ r3 /100) ;
CI =A - P ;
)
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Scilab code Exa 2.7 Find the amount

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// Exa7
clc ;
clear ;
close ;
CI =496.50; // compound i n t e r e s t i n r u p e e s
n =3; // i n y e a r s
r =10; // r a t e i n % p e r annum
disp ( CI i s g i v e n by : ) ;
disp ( CI=P(1+ r / 1 0 0 ) nP ) ;
// s o l v i n g t h i s eqn
P = CI /((1+ r /100) ^n -1) ;
disp ( P r i n c i p a l amount i s : + string ( P ) + Rupees . )
Scilab code Exa 2.8 Find the time

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// Exa8
clc ;
clear ;
close ;
P =2000; // i n r u p e e s
A =2662; // i n r u p e e s
// f o r m u l a : A=P(1+ r / 1 0 0 ) n ;
// s o l v i n g f o r n
n = log ( A / P ) / log (1+ r /100) ;
disp ( The t i m e i n which Rs . 2 0 0 0 w i l l
2662 i s
: + string ( n ) + y e a r s . )
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r i s e t o Rs .
Scilab code Exa 2.9 Find the principal amount

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// Exa9
clc ;
clear ;
close ;
n =2; // i n y e a r s
// l e t amount=P
// CI=P(1+ r / 1 0 0 ) nP ;
// S I =(P r n ) / 1 0 0 ;
// CIS I =15 Rupees ; g i v e n
disp ( s o l v i n g e q n s f o r CI and SI , we g e t : )
disp ( CI = 0 . 1 0 2 5 P ) ;
disp ( S I =0 .1 0P ) ;
P =15/(0.1025 -0.10) ; // u s i n g CIS I
disp ( P r i n c i p a l amount i s : + string ( P ) + Rupees . )
Scilab code Exa 2.10 Calculate simple interest

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// Exa9
clc ;
clear ;
close ;
CI =102; // i n r u p e e s
n =2; // i n y e a r s
// L e t p r i n c i p a l amount i s P
// Amount w i l l be : A=P+102
// f o r m u l a : A=P(1+ r / 1 0 0 ) n=P+102;
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12 P =102/((1+ r /100) ^n -1) ;

13 SI =( P * r * n ) /100;
14 disp ( S i m p l e i n t e r e s t i s
: + string ( SI ) + Rupees . )
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Chapter 4
Capital Budgeting
Scilab code Exa 4.1 Calculate payback period

1 // Exa 1
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 OrgInv =50000; // i n Rs .
7 AnnualCashInflow =10000; // i n Rs .
8 PaybackPeriod = OrgInv / AnnualCashInflow ;
9 disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t ( i n
y e a r s ) i s : );

1 // Exa 2
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
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// c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h y e a r s
CIF1 =20000; // i n Rs .
CIF2 =30000; // i n Rs .
CIF3 =40000; // i n Rs .
CIF4 =50000; // i n Rs .
// Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h
years
CumCIF1 =20000; // i n Rs .
CumCIF2 =50000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =140000; // i n Rs .
disp ( I n t h e t a b l e i t can be s e e n t h a t i n 3 y e a r s
9 0 0 0 0 Rs h a s b e e n r e c o v e r e d , Rs . 1 0 0 0 0 i s l e f t
out o f i n i t i a l investment . )
disp ( Payback p e r i o d i s b e t w e e n 3 and 4 y e a r s . )
E =3;
B =100000 -90000; // r e m a i n i n g b a l a n c e t o be r e c o v e r e d
C =50000; // c a s h f l o w o f l a s t y e a r
PaybackPeriod = E + B / C ;
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t ( i n
y e a r s ) i s : );
// Note : a n s i n t h e book i s n o t a c c u r a t e , g i v e n 3
y e a r s and two month . but i t i s 3 . 2 y e a r s and can
s a y 3 y e a r s 2 month p l u s 12 d a y s .

1 // Exa 1
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a f o r p r o j e c t A :
6 Investment =100000; // i n Rs
7 AnnCIF =25000; // i n Rs
8 PayBackPeriod = Investment / AnnCIF ; // i n y e a r s
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disp ( PayBackPeriod , Payback p e r i o d o f t h e

in years ) i s : )
// g i v e n d a t a f o r p r o j e c t B :
Investment =70000; // i n Rs
AnnCIF =15000; // i n Rs
PayBackPeriod = Investment / AnnCIF ; // i n y e a r s
in years ) i s : )
// g i v e n d a t a f o r p r o j e c t C :
in years ) i s : )
// g i v e n d a t a f o r p r o j e c t D :
in years ) i s : )
p r o j e c t A(
p r o j e c t B(
p r o j e c t C(
p r o j e c t D(
// g i v e n d a t a f o r p r o j e c t E :
disp ( PayBackPeriod , Payback p e r i o d o f t h e p r o j e c t E(
in years ) i s : )

1 // Exa 4
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
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inINV =100000; // i n i t i a l i n v e s t m e n t i n Rs . and e q u a l

for all projects
// P r o j e c t A : c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5
th y e a r s
CIF1 =30000; // i n Rs .
CIF2 =30000; // i n Rs .
CIF3 =30000; // i n Rs .
CIF4 =30000; // i n Rs .
CIF5 =30000; // i n Rs .
// P r o j e c t A : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
rd , 4 t h and 5 t h y e a r s
CumCIF1 =30000; // i n Rs .
CumCIF2 =60000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =120000; // i n Rs .
CumCIF5 =150000; // i n Rs .
E =3;
C =30000; // c a s h f l o w o f l a s t payback y e a r
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t A(
i n y e a r s ) i s : );
// P r o j e c t B : c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5
th y e a r s
CIF1 =30000; // i n Rs .
CIF2 =40000; // i n Rs .
CIF3 =20000; // i n Rs .
CIF4 =10000; // i n Rs .
CIF5 =5000; // i n Rs .
// P r o j e c t B : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
CumCIF1 =30000; // i n Rs .
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CumCIF2 =70000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =100000; // i n Rs .
CumCIF5 =105000; // i n Rs .
disp ( I n t h e t a b l e i t can be s e e n t h a t i n c o m p l e t e 4
y e a r s 1 0 0 0 0 0 Rs h a s b e e n r e c o v e r e d . )
41 disp (4 , Payback p e r i o d o f t h e p r o j e c t B( i n y e a r s ) i s
: );
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// P r o j e c t C : c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5
th y e a r s
CIF1 =40000; // i n Rs .
CIF2 =20000; // i n Rs .
CIF3 =30000; // i n Rs .
CIF4 =40000; // i n Rs .
CIF5 =10000; // i n Rs .
// P r o j e c t C : Cummulative c a s h i n f l o w s o f 1 s t , 2 nd , 3
CumCIF1 =40000; // i n Rs .
CumCIF2 =60000; // i n Rs .
CumCIF3 =90000; // i n Rs .
CumCIF4 =130000; // i n Rs .
CumCIF5 =140000; // i n Rs .
E =3;
disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t C(
i n y e a r s ) i s : );
// f i n a l c o n c l u s i o n
disp ( As a l l t h e p r o j e c t s have payback p e r i o d o f
l e s s t h a n 5 y e a r s and 5 y e a r s i s t h e s t a n d a r d
payback p e r i o d , a l l t h e t h r e e p r o j e c t s a r e
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a c c e p t a b l e . )
Scilab code Exa 4.5 Find average investment

1 // Exa 5
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 InInv =30000; // i n i t i a l i n v e s t m e n t i n Rs .
7 SalvageValue =3000; // i n Rs .
8 WorkingCapital =6000; // i n Rs .
9 Life =4; // e x p e c t e d l i f e o f t h e p r o j e c t
10 // A v e r a g e I n v e s t m e n t i s g i v e n by : AvgInv =( I n I n v
S a l v a g e V a l u e ) /2+ S a l v a g e V a l u e+W o r k i n g C a p i t a l
AvgInv =( InInv - SalvageValue ) /2+ SalvageValue +
WorkingCapital
12 disp ( AvgInv , A v e r a g e i n v e s t m e n t o f t h e p r o j e c t i s :
)
11
Scilab code Exa 4.6 Calculate accounting rate of return

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// Exa 6
clc ;
clear ;
close ;
CostofMac =80000; // i n Rs .
SalvageValue =10000 // i n Rs .
// P r o f i t s o f 1 s t , 2 nd , 3 rd , 4 t h and t h y e a r s
P1 =20000; // i n Rs .
P2 =40000; // i n Rs .
P3 =30000; // i n Rs .
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12 P4 =15000; // i n Rs .
13 P5 =5000; // i n Rs .
14 // T o t a l p r o f i t b e f o r e d e p r e c i a t i o n
15 Pbd = P1 + P2 + P3 + P4 + P5 ; // i n Rs .
16 disp ( Pbd , T o t a l p r o f i t b e f o r e d e p r e c i a t i o n ( i n Rs ) :
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)
AvgP = Pbd /5; // A v e r a g e p r o f i t p e r annum
disp ( AvgP , A v e r a g e p r o f i t p e r annum ( i n Rs . ) : )
// T o t a l D e p r e c i a t i o n o f t h e machine
TotDep = CostofMac - SalvageValue
disp ( TotDep , T o t a l D e p r e c i a t i o n o f t h e machine ( i n Rs
. ) : )
// A v e r a g e D e p r e c i a t i o n p e r annum
AvgD = TotDep /5;
disp ( AvgD , A v e r a g e D e p r e c i a t i o n p e r annum ( i n Rs . ) :
)
// A v e r a g e a n n u a l p r o f i t a f t e r D e p r e c i a t i o n
AvgPafterDepreciation = AvgP - AvgD ;
disp ( AvgPafterDepreciation , A v e r a g e a n n u a l p r o f i t
a f t e r D e p r e c i a t i o n ( i n Rs . ) : )
// Return on o r i g i n a l i n v e s t m e n t
ReturnOnOrg =( AvgPafterDepreciation / CostofMac ) *100; //
in %
disp ( ReturnOnOrg , Return on o r i g i n a l i n v e s t m e n t ( i n %
) : )
// Return on a v e r a g e i n v e s t m e n t
ReturnOnAvgInv =( AvgPafterDepreciation /(( CostofMac +
SalvageValue ) /2) ) *100; // i n %
disp ( ReturnOnAvgInv , Return on a v e r a g e i n v e s t m e n t ( i n
%) : )
Scilab code Exa 4.7 Calculate average rate of return

1 // Exa 7
2 clc ;
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clear ;
close ;
// I n i t i a l I n v e s t m e n t
InINv =25000; // i n Rs .
// S c r a p V a l u e
ScrapValue =5000 // i n Rs .
// P r o f i t b e f o r e t a x and D e p r e c i a t i o n
P1 =5000; // i n Rs
P2 =6000; // i n Rs
P3 =7000; // i n Rs
P4 =8000; // i n Rs
P5 =10000; // i n Rs
// T o t a l P r o f i t
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs .
// A v e r a g e P r o f i t
AvgP = P /5; // i n Rs .
// T o t a l D e p r e c i a t i o n by s t r a i g h t l i n e method
D =4000*5; // i n Rs .
// A v e r a g e D e p r e c i a t i o n
AvgD = D /5; // i n Rs
// Net i n c o m e b e f o r e t a x
NetIncomebefTax = AvgP - AvgD ;
// Tax 50%
Tax =( NetIncomebefTax *50) /100; // i n Rs
// A v e r a g e a n n u a l i n c o m e a f t e r t a x and d e p r e c i a t i o n
NetInc = NetIncomebefTax - Tax ; // i n RS .
// A v e r a g e I n v e s t m e n t
AvgInv =( InINv + ScrapValue ) /2; // i n Rs .
disp ( AvgInv , A v e r a g e I n v e s t m e n t i n Rs . : )
// A v e r a g e r a t e o f r e t u r n on a v e r a g e I n v e s t m e n t
ARR =( NetInc / AvgInv ) *100; // i n %
disp ( ARR , A v e r a g e r a t e o f r e t u r n on a v e r a g e
Investment in % : )
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Scilab code Exa 4.8 Determine average rate of return

1 // Exa 8
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a f o r machine A :
6 OrgCost =56125; // i n Rs .
7 // A d d i t i o n a l I n v e s t m e n t I n w o r k i n g c a p i t a l
8 AddInv =5000; // i n Rs .
9 // E s t i m a t e d L i f e
10 life =5; // i n y e a r s
11 // E s t i m a t e d S a l v a g e v a l u e
12 Salvage =3000; // i n Rs .
13 // A v e r a g e Income Tax Rate
14 Trate =60; // i n %
15 // A v e r a g e e s t i m a t e d i n c o m e b e f o r e t a x and
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Depreciation
I1 =13375; // i n Rs .
I2 =15375; // i n Rs .
I3 =17375; // i n Rs .
I4 =19375; // i n Rs .
I5 =21375; // i n Rs .
// T o t a l Income
I = I1 + I2 + I3 + I4 + I5 ; // i n Rs .
// a v e r a g e i n c o m e b e f o r e t a x and d e p r e c i a t i o n
AvgI = I /5; // i n RS .
// D e p r e c i a t i o n by s t r a i g h t l i n e
D =( OrgCost - Salvage ) /5; // i n Rs
// A v e r a g e Income a f t e r D e p r e c i a t i o n
AvgID = AvgI - D ; // i n Rs .
// Tax by 60 %
Tax =( AvgID *60) /100; // i n Rs
// Income a f t e r t a x and d e p r e c i a t i o n
AvgITD = AvgID - Tax ; // i n Rs
// A v e r a g e Rate o f Return
ARR =( AvgITD /(( OrgCost + Salvage ) /2+ AddInv ) ) *100; // i n
Rs
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disp ( ARR , A v e r a g e Rate o f Return o f machine A i n % :

)
// g i v e n d a t a f o r machine B :
OrgCost =56125; // i n Rs .
// A d d i t i o n a l I n v e s t m e n t I n w o r k i n g c a p i t a l
AddInv =6000; // i n Rs .
// E s t i m a t e d L i f e
life =5; // i n y e a r s
// E s t i m a t e d S a l v a g e v a l u e
Salvage =3000; // i n Rs .
// A v e r a g e Income Tax Rate
Trate =60; // i n %
// A v e r a g e e s t i m a t e d i n c o m e b e f o r e t a x and
Depreciation
I1 =21375; // i n Rs .
I2 =19375; // i n Rs .
I3 =17375; // i n Rs .
I4 =15375; // i n Rs .
I5 =13375; // i n Rs .
// T o t a l Income
I = I1 + I2 + I3 + I4 + I5 ; // i n Rs .
// a v e r a g e i n c o m e b e f o r e t a x and d e p r e c i a t i o n
AvgI = I /5; // i n RS .
// D e p r e c i a t i o n by s t r a i g h t l i n e
D =( OrgCost - Salvage ) /5; // i n Rs
// A v e r a g e Income a f t e r D e p r e c i a t i o n
AvgID = AvgI - D ; // i n Rs .
// Tax by 60 %
Tax =( AvgID *60) /100; // i n Rs
// Income a f t e r t a x and d e p r e c i a t i o n
AvgITD = AvgID - Tax ; // i n Rs
// A v e r a g e Rate o f Return
ARR =( AvgITD /(( OrgCost + Salvage ) /2+ AddInv ) ) *100; // i n
Rs
disp ( ARR , A v e r a g e Rate o f Return o f machine B i n % :
)
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Scilab code Exa 4.9 Appraise profitability of proposed investment

// Exa 9
clc ;
clear ;
close ;
// i n i t i a l c a s h o u t f l o w s
ICO =50000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h y e a r s
CIF1 =20000; // i n Rs .
CIF2 =15000; // i n Rs .
CIF3 =25000; // i n Rs .
CIF4 =10000; // i n Rs .
//P . V f a c t o r a t 10% r a t e o f d i s c o u n t
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
PV4 =0.683;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
// T o t a l P r e s e n t V a l u e
P = P1 + P2 + P3 + P4 ; // i n Rs
// Net P r e s e n t V a l u e
NPV =P - ICO ; // i n Rs
disp ( NPV , Net P r e s e n t V a l u e i s : )
// p r o f i t a b o l i t y i n d e x
PVI = P / ICO ; // u n i t l e s s
disp ( PVI , P r o f i t a b i l i t y I n d e x o f t h e p r o j e c t a s
c a l c u l a t e d i s : )
31 disp ( As P r o f i t a b i l i t y I n d e x o f t h e p r o j e c t i s
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g r e a t e r t h a n 1 , t h e p r o p o s a l can be a c c e p t e d . )
// Net p r o f i t a b i l i t y
NPVI = NPV / ICO ;
disp ( NPVI , Net p r o f i t a b i l i t y o f t h e p r o j e c t i s : )
disp ( As Net P r o f i t a b i l i t y I n d e x o f t h e p r o j e c t i s +
ve , t h e p r o p o s a l may be a c c e p t e d . )
Scilab code Exa 4.10 Calculate internal rate of return

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// Exa 10
clc ;
clear ;
close ;
ICO =40000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 r d and 4 t h y e a r s i s same
CIF =16000; // i n Rs .
//PV F a c t o r
PV = ICO / CIF ; // u n i t l e s s
disp ( PV , PV f a t o r o f t h e p r o j e c t i s : )
disp ( T h i s v a l u e i s i n b e t w e e n 2 . 4 9 3 6 and 2 . 5 8 8 7 ) ;
disp ( Hence IRR o f t h e p r o j e c t i s e x p e c t e d t o l i e
b e t w e e n 20% and 22% )
//PV o f c a s h i n f l o w s a t 20%
PV20 = CIF *2.5887; // i n Rs
PV22 = CIF *2.4936; // i n Rs
disp ( PV20 , a t 20% PV o f c a s h i n f l o w s ( i n Rs ) i s : )
disp ( PV22 , a t 22% PV o f c a s h i n f l o w s ( i n Rs ) i s : )
//By i n t e r p o l a t i o n
LDR =20; // i n % ; Lower d i s c o u n t r a t e
HDR =22; // i n % ; H i g h e r d i s c o u n t r a t e
P1 =41419; // i n Rs ; P r e s e n t v a l u e a t l o w e r r a t e o f
interest
P2 =39898; // i n Rs ; P r e s e n t v a l u e a t h i g h e r r a t e o f
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interest
25 IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
Internal rate of return
26 disp ( IRR , I n t e r n a l r a t e o f r e t u r n o f t h e p r o j e c t ( i n
%) : )
Scilab code Exa 4.11 Calculate internal rate of return

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// Exa 11
clc ;
clear ;
close ;
ICO =10000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd and 3 r d y e a r s
CIF1 =5000; // i n Rs .
CIF2 =4000; // i n Rs .
CIF3 =3000; // i n Rs .
// a v e r a g e a n n u a l CIF
CIF =( CIF1 + CIF2 + CIF3 ) /3; // i n Rs
// s t e p 1 : c a l c u l a t e f i r s t t r i a l r a t e
PV = ICO / CIF ; // u n i t l e s s
disp ( PV , T r i a l PV f a c t o r i s : )
disp ( The r a t e o f r e t u r n a t t h i s PV i s a p p r o x i m a t e l y
10% )
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
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27 P = P1 + P2 + P3 ; // i n Rs
28 disp (P , t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t 10%
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r a t e i s : )
disp ( As t h e t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t
10% r a t e i s 1 0 1 0 2 RS . i s more t h a n t h e c o s t o f
investment . )
disp ( The n e x t t r i a l r a t e can be t a k e n a s 12%. )
PV1 =0.893;
PV2 =0.797;
PV3 =0.712;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P = P1 + P2 + P3 ; // i n Rs
disp (P , t o t a l p r e s e n t v a l u e o f c a s h i n f l o w s a t 12%
r a t e i s : )
12% r a t e i s 9 7 8 9 RS . i s l e s s t h a n t h e c o s t o f
investment . )
// IRR w i l l be c a l c u l a t e d by i n t e r p o l a t i o n o f t h e s e
two r a t e s
interest
interest
IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
disp ( IRR , I n t e r n a l r a t e o f r e t u r n o f t h e p r o j e c t ( i n
%) : )
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Scilab code Exa 4.12 Discuss according to internal rate of return

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// Exa 12
clc ;
clear ;
close ;
ICO =70000; // i n Rs .
// c a s h i n f l o w s o f 1 s t , 2 nd , 3 rd , 4 t h and 5 t h y e a r s
CIF1 =50000; // i n Rs .
CIF2 =40000; // i n Rs .
CIF3 =20000; // i n Rs .
CIF4 =10000; // i n Rs .
CIF5 =10000; // i n Rs .
PV1 =0.741;
PV2 =0.549;
PV3 =0.406;
PV4 =0.301;
PV5 =0.223;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
investment . )
PV1 =0.714;
PV2 =0.510;
PV3 =0.364;
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PV4 =0.260;
PV5 =0.186;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
40% r a t e i s 6 7 8 4 0 RS . i s l e s s t h a n t h e c o s t o f
investment . )
two r a t e s
interest
interest
IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
%) : )
// Minimum d e s i r e d r a t e o f r e t u r n f i x e d by management
i s 25%
disp ( As t h e c a l c u l a t e d IRR i s g r e a t e r t h a n t h e
minimum f i x e d r a t e . P r o j e c t s h o u l d be a c e p t e d . )
Scilab code Exa 4.13.1 Calculate payback period

1 // Exa 1 3 . 1
2 clc ;
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3 clear ;
4 close ;
5 // g i v e n d a t a :
6 // i n i t i a l c a s h o u t f l o w s
7 ICO =80000; // i n Rs .
8 // c a s h i n f l o w s o f 10 y e a r s
9 CIF1 =14000; // i n Rs .
10 CIF2 =14000; // i n Rs .
11 CIF3 =14000; // i n Rs .
12 CIF4 =14000; // i n Rs .
13 CIF5 =14000; // i n Rs .
14 CIF6 =16000; // i n Rs .
15 CIF7 =20000; // i n Rs .
16 CIF8 =30000; // i n Rs .
17 CIF9 =20000; // i n Rs .
18 CIF10 =8000; // i n Rs .
19 // Cummulative c a s h i n f l o w s o f 10 y e a r s
20 CumCIF1 =14000; // i n Rs .
21 CumCIF2 =28000; // i n Rs .
22 CumCIF3 =42000; // i n Rs .
23 CumCIF4 =560000; // i n Rs .
24 CumCIF5 =70000; // i n Rs .
25 CumCIF6 =86000; // i n Rs .
26 CumCIF7 =106000; // i n Rs .
27 CumCIF8 =136000; // i n Rs .
28 CumCIF9 =156000; // i n Rs .
29 CumCIF10 =164000; // i n Rs .
30 disp ( I n t h e t a b l e i t can be s e e n t h a t i n 5 y e a r s
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disp ( PaybackPeriod , Payback p e r i o d o f t h e p r o j e c t ( i n
y e a r s ) i s : );
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Scilab code Exa 4.13.2 Calculate average rate of return

1 // Exa 1 3 . 2
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
7 ICO =80000; // i n Rs .
9 CIF1 =14000; // i n Rs .
10 CIF2 =14000; // i n Rs .
11 CIF3 =14000; // i n Rs .
12 CIF4 =14000; // i n Rs .
13 CIF5 =14000; // i n Rs .
14 CIF6 =16000; // i n Rs .
15 CIF7 =20000; // i n Rs .
16 CIF8 =30000; // i n Rs .
17 CIF9 =20000; // i n Rs .
18 CIF10 =8000; // i n Rs .
19 // Cummulative c a s h i n f l o w s o f 10 y e a r s
20 CumCIF1 =14000; // i n Rs .
21 CumCIF2 =28000; // i n Rs .
22 CumCIF3 =42000; // i n Rs .
23 CumCIF4 =560000; // i n Rs .
24 CumCIF5 =70000; // i n Rs .
25 CumCIF6 =86000; // i n Rs .
26 CumCIF7 =106000; // i n Rs .
27 CumCIF8 =136000; // i n Rs .
28 CumCIF9 =156000; // i n Rs .
29 CumCIF10 =164000; // i n Rs .
30 // a v e r a g e a n n u a l CIF
31 AvgCIF = CumCIF10 /10;
32 // A v e r a g e D e p r e c i a t i o n p e r annum
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33 AvgD = ICO /10;

34 // a v e r a g e i n v e s t m e t
35 AvgINV =40000; // i n Rs
36 // C a l c u l a t i o n o f a v e r a g e r a t e o f r e t u r n
37 ARR =(( AvgCIF - AvgD ) / AvgINV ) *100; // i n %
38 disp ( ARR , A v e r a g e r a t e o f r e t u r n o f t h e p r o j e c t ( i n %
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) i s : )
// A v e r a g e a n n u a l c a s h i n f l o w
AvgCIF = CIF10 /10; // i n Rs
// Annual D e p r e c i a t i o n
ScrapValue =0;
ADep =( ICO - ScrapValue ) /10; // i n Rs
// A v e r a g e i n v e s t m e n t
AvgInv =( ICO + ScrapValue ) /2; // i n Rs
Scilab code Exa 4.13.3 Calculate Net present value

1 // Exa 1 3 . 3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
7 ICO =80000; // i n Rs .
9 CIF1 =14000; // i n Rs .
10 CIF2 =14000; // i n Rs .
11 CIF3 =14000; // i n Rs .
12 CIF4 =14000; // i n Rs .
13 CIF5 =14000; // i n Rs .
14 CIF6 =16000; // i n Rs .
15 CIF7 =20000; // i n Rs .
16 CIF8 =30000; // i n Rs .
17 CIF9 =20000; // i n Rs .
18 CIF10 =8000; // i n Rs .
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PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
PV4 =0.683;
PV5 =0.621;
PV6 =0.564;
PV7 =0.513;
PV8 =0.467;
PV9 =0.424;
PV10 =0.386;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P6 = CIF6 * PV6 ; // i n Rs
P7 = CIF7 * PV7 ; // i n Rs
P8 = CIF8 * PV8 ; // i n Rs
P9 = CIF9 * PV9 ; // i n Rs
P10 = CIF10 * PV10 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 + P6 + P7 + P8 + P9 + P10 ; // i n Rs
// Net P r e s e n t V a l u e a t 10% d i s c o u n t r a t e
NPV =P - ICO ; // i n Rs
disp ( NPV , Net P r e s e n t V a l u e a t 10% d i s c o u n t r a t e i s
: )
Scilab code Exa 4.13.4 Calculate profitability index

1 // Exa 1 3 . 4
2 clc ;
3 clear ;
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4 close ;
5 // g i v e n d a t a :
7 ICO =80000; // i n Rs .
8 // T o t a l P r e s e n t V a l u e c a l c u l a t e d i n Exa13 . 3
9 P =97922; // i n Rs
10 disp (P , T o t a l p r e s e n t v a l u e ( i n Rs ) i s : )
11 // P r o f i t a b i l i t y I n d e x a t 10% d i s c o u n t r a t e
12 PI = P / ICO ; // u n i t l e s s
13 disp ( PI , P r o f i t a b i l i t y I n d e x a t 10% d i s c o u n t
: )
Scilab code Exa 4.13.5 Calculate internal rate of return

1 // Exa 1 3 . 5
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
7 ICO =80000; // i n Rs .
9 CIF1 =14000; // i n Rs .
10 CIF2 =14000; // i n Rs .
11 CIF3 =14000; // i n Rs .
12 CIF4 =14000; // i n Rs .
13 CIF5 =14000; // i n Rs .
14 CIF6 =16000; // i n Rs .
15 CIF7 =20000; // i n Rs .
16 CIF8 =30000; // i n Rs .
17 CIF9 =20000; // i n Rs .
18 CIF10 =8000; // i n Rs .
19 // Cummulative c a s h i n f l o w s
20 CumCIF1 =14000; // i n Rs .
21 CumCIF2 =28000; // i n Rs .
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o f 10 y e a r s
rate is
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CumCIF3 =42000; // i n Rs .
CumCIF4 =560000; // i n Rs .
CumCIF5 =70000; // i n Rs .
CumCIF6 =86000; // i n Rs .
CumCIF7 =106000; // i n Rs .
CumCIF8 =136000; // i n Rs .
CumCIF9 =156000; // i n Rs .
CumCIF10 =164000; // i n Rs .
PV1 =0.870;
PV2 =0.756;
PV3 =0.658;
PV4 =0.572;
PV5 =0.497;
PV6 =0.432;
PV7 =0.376;
PV8 =0.327;
PV9 =0.284;
PV10 =0.247;
P1 = CIF1 * PV1 ; // i n Rs
P2 = CIF2 * PV2 ; // i n Rs
P3 = CIF3 * PV3 ; // i n Rs
P4 = CIF4 * PV4 ; // i n Rs
P5 = CIF5 * PV5 ; // i n Rs
P6 = CIF6 * PV6 ; // i n Rs
P7 = CIF7 * PV7 ; // i n Rs
P8 = CIF8 * PV8 ; // i n Rs
P9 = CIF9 * PV9 ; // i n Rs
P10 = CIF10 * PV10 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 + P6 + P7 + P8 + P9 + P10 ; // i n Rs
// IRR By i n t e r p o l a t i o n
interest
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59 P2 =78840; // i n Rs ;
Present value at higher rate of
interest
60 IRR = LDR +(( P1 - ICO ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
61

%) : )
Scilab code Exa 4.14.1 Compute payback period

1 // Exa 1 4 ( i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
i n v e s t m e n t i n Rs . and e q u a l
for all projects

7 life =5; // i n y e a r s
8 salvage =0; // i n Rs .
9 TaxRate =55; // i n %
10 // d e p r e c i a t i o n t y p e : S t r a i g h t l i n e
11 D = inINV / life ; // i n Rs
12 // c a s h f l o w s b e f o r e t a x o f 1 s t , 2 nd , 3 rd , 4 t h and 5 t h
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CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
// Income b e f o r e t a x a f t e r d e p r e c i a t i o n
IBT1 = CBFT1 - D ; // i n Rs .
// Net i n c o m e a f t e r Tax ( 5 5%) and d e p r e c i a t i o n
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IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs

IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
IATD =( IATD1 + IATD2 + IATD3 + IATD4 + IATD5 ) /5; // i n Rs .
AvgInv =( inINV + salvage ) /2; // i n Rs
// Annual c a s h i n f l o w s
ACI1 = IATD1 + D ; // i n RS
CumCIF1 = ACI1 ; // i n Rs .
CumCIF2 = ACI1 + ACI2 ; // i n Rs .
CumCIF3 = ACI1 + ACI2 + ACI3 ; // i n Rs .
CumCIF4 = ACI1 + ACI2 + ACI3 + ACI4 ; // i n Rs .
CumCIF5 = ACI1 + ACI2 + ACI3 + ACI4 + ACI5 ; // i n Rs .
// p a r t ( i ) c a l c u l a t i o n o f payback p e r i o d
disp ( I n t h e c o m p u t a t i o n i t can be s e e n t h a t i n 4
y e a r s 4 4 5 0 0 Rs h a s b e e n r e c o v e r e d , Rs . 5 5 0 0 i s
l e f t out o f i n i t i a l investment . )
E =4;
disp ( PaybackPeriod , P a r t ( i ) Payback p e r i o d o f t h e
p r o j e c t ( i n y e a r s ) i s : );
Scilab code Exa 4.14.2 Compute average rate of return

50
1 // Exa 1 4 ( i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
for all projects

9 TaxRate =55; // i n %
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
51
37
38
39
40
41
42
43
44
45
46
47
48
// p a r t ( i i ) c a l c u l a t i o n o f ARR
ARR =( IATD / AvgInv ) *100; // i n %
disp ( ARR , P a r t ( i i ) A v e r a g e r a t e o f r e t u r n ( i n %) :
)
Scilab code Exa 4.14.3 Compute Net present value

1 // Exa 1 4 ( i i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
for all projects

9 TaxRate =55; // i n %
13
14
15
16
years
CBFT1 =10000; // i n
CBFT2 =11000; // i n
CBFT3 =14000; // i n
CBFT4 =15000; // i n
Rs .
Rs .
Rs .
Rs .
52
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
CBFT5 =25000; // i n Rs .
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// p a r t ( i i i ) c a l c u l a t i o n o f Net P r e s e n t v a l u e
//PV a t 10%
PV1 =0.909;
PV2 =0.826;
PV3 =0.751;
PV4 =0.683;
53
54 PV5 =0.621;
55 // P r e s e n t v a l u e
56
57
58
59
60
61
62
63
64
65
f o r a l l c a s h i n f l o w s a t 10%
d i s c o u n t Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
// Net P r e s e n t V a l u e
NPV =P - inINV ; // i n Rs
disp ( NPV , P a r t ( i i i ) Net P r e s e n t V a l u e i s : )
Scilab code Exa 4.14.4 Calculate profitability index

1 // Exa 1 4 ( i v )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
7
8
9
10
11
12
13
14
15
16
17
for all projects

salvage =0; // i n Rs .
TaxRate =55; // i n %
// d e p r e c i a t i o n t y p e : S t r a i g h t l i n e
D = inINV / life ; // i n Rs
// c a s h f l o w s b e f o r e t a x o f 1 s t , 2 nd , 3 rd , 4 t h and 5 t h
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
54
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
// p a r t ( i v ) P r o f i t a b i l i t y i n d e x a t 10% d i s c o u n t r a t e
PI = P / inINV ; // u n i t l e s s
disp ( PI , P a r t ( i v ) P r o f i t a b i l i t y i n d e x a t 10%
d i s c o u n t r a t e : );
Scilab code Exa 4.14.5 Calculate internal rate of return

55
1 // Exa 1 4 ( v )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 inINV =50000; // i n i t i a l
for all projects

9 TaxRate =55; // i n %
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
years
CBFT1 =10000; // i n Rs .
CBFT2 =11000; // i n Rs .
CBFT3 =14000; // i n Rs .
CBFT4 =15000; // i n Rs .
CBFT5 =25000; // i n Rs .
IATD1 = IBT1 -( IBT1 *55) /100; // i n Rs
IATD2 = IBT2 -( IBT2 *55) /100; // i n Rs
IATD3 = IBT3 -( IBT3 *55) /100; // i n Rs
IATD4 = IBT4 -( IBT4 *55) /100; // i n Rs
IATD5 = IBT5 -( IBT5 *55) /100; // i n Rs
56
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
// p a r t ( v ) I n t e r n a l Rate o f r e t u r n
investment . )
//PV a t 8%
PV1 =0.926;
PV2 =0.857;
PV3 =0.794;
PV4 =0.735;
PV5 =0.681;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s a t 8% d i s c o u n t
Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
disp (P , T o t a l P r e s e n t V a l u e a t 8% d i s c o u n t r a t e . )
investment . )
//PV a t 6%
57
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
PV1 =0.943;
PV2 =0.890;
PV3 =0.840;
PV4 =0.792;
PV5 =0.747;
// P r e s e n t v a l u e f o r a l l c a s h i n f l o w s a t 6% d i s c o u n t
Rate
P1 = ACI1 * PV1 ; // i n Rs
P2 = ACI2 * PV2 ; // i n Rs
P3 = ACI3 * PV3 ; // i n Rs
P4 = ACI4 * PV4 ; // i n Rs
P5 = ACI5 * PV5 ; // i n Rs
P = P1 + P2 + P3 + P4 + P5 ; // i n Rs
investment . )
two r a t e s 6% and 8%
interest
interest
IRR = LDR +(( P1 - inINV ) /( P1 - P2 ) ) *( HDR - LDR ) ; // i n % :
disp ( IRR , P a r t ( v ) I n t e r n a l r a t e o f r e t u r n o f t h e
p r o j e c t ( i n %) : )
58
Chapter 5
Analysis of public projects
Scilab code Exa 5.2 Demonstrate use of annual present and future worth
operation
1 // Exa 2
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 IC =1500000; // i n Rupees
7 OMC =65000; // i n Rupees ( a n n u a l c o s t
8
9
10
11
12
13
14
15
16
17
18
19
f o r o p e r a t i n g and
maintenance )
B =225000; // i n Rupees ( a n n u a l s a v i n g and b e n e f i t s
ScrapValue =300000; // i n Rupees
Irate =8; // i n %
// // u s i n g p r e s e n t worth // //
// c a l c u l a t i n g p r e s e n t worth o f s a v i n g s
PWbenefits1 =0;
for i =1:30
PWbenefits1 = PWbenefits1 + B /(1+ Irate /100) ^ i ;
end
// c a l c u l a t i n g p r e s e n t worth o f s c r a p v a l u e
59
20
21
22
23
24
25
26
27
28
29
30
PWbenefits2 = B /(1+ Irate /100) ^ life ;

PWbenefits = PWbenefits1 + PWbenefits2 ; // t o t a l p r e s e n t
worth o f b e n e f i t s
disp ( PWbenefits , P r e s n t worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g p r e s e n t worth o f c o s t
PWcost1 = IC ; // same t h e i n i t i a l c o s t
// c a l c u l a t i n g p r e s e n t worth o f o p e r a t i n g and
maintenance c o s t
PWcost2 =0;
for i =1:30
PWcost2 = PWcost2 + OMC /(1+ Irate /100) ^ i ;
end
PWcost = PWcost1 + PWcost2 ; // t o t a l p r e s e n t worth o f
cost
disp ( PWcost , P r e s n t worth o f t h e c o s t ) ;
BCratio = PWbenefits / PWcost ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g p r e s e n t worth i s : )
31
32
33
34
35
36 // // u s i n g f u t u r e worth // //
37 // c a l c u l a t i n g f u t u r e worth o f s a v i n g s
38 FWbenefits1 =0;
39 for i =1:30
40
FWbenefits1 = FWbenefits1 + B *(1+ Irate /100) ^( life - i )
;
41 end
42 // c a l c u l a t i n g f u t u r e worth o f s c r a p v a l u e
43
44 FWbenefits2 = ScrapValue ;
45 FWbenefits = FWbenefits1 + FWbenefits2 ; // t o t a l
46
47
48
49
50
51
future
disp ( FWbenefits , F u t u r e worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g F u t u r e worth o f c o s t
FWcost1 = IC *(1+ Irate /100) ^ life ; // t h e i n i t i a l c o s t
// c a l c u l a t i n g f u t u r e worth o f o p e r a t i n g and
maintenance c o s t
FWcost2 =0;
for i =1:30
60
52
FWcost2 = FWcost2 + OMC *(1+ Irate /100) ^( life - i ) ;
53 end
54 FWcost = FWcost1 + FWcost2 ; // t o t a l f u t u r e worth o f c o s t
55 disp ( FWcost , F u t u r e worth o f t h e c o s t ) ;
56 BCratio = FWbenefits / FWcost ; // f o r m u l a
57 disp ( BCratio , B C r a t i o u s i n g f u t u r e worth i s : )
58
59
60 // // u s i n g a n n u a l worth // //
61 // c a l c u l a t i n g a n n u a l worth o f s a v i n g s
62 AWbenefits1 =0;
63 for i =1:30
64
AWbenefits1 = AWbenefits1 + B *(1+ Irate /100) ^( life - i )
;
65 end
66 // c a l c u l a t i n g a n n u a l worth o f s c r a p v a l u e
67
68 AWbenefits2 = ScrapValue ;
69 AWbenefits = AWbenefits1 + AWbenefits2 ; // t o t a l Annual
70
71
72
73
74
75
76
77
78
79
80
81
82
83
disp ( AWbenefits , Annual worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g Annual worth o f c o s t
AWcost1 = IC *(1+ Irate /100) ^ life ; // t h e i n i t i a l c o s t
// c a l c u l a t i n g a n n u a l worth o f o p e r a t i n g and
maintenance c o s t
AWcost2 =0;
for i =1:30
AWcost2 = AWcost2 + OMC *(1+ Irate /100) ^( life - i ) ;
end
AWcost = AWcost1 + AWcost2 ; // t o t a l a n n u a l worth o f c o s t
disp ( AWcost , Annual worth o f t h e c o s t ) ;
BCratio = AWbenefits / AWcost ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g Annual worth i s : )
disp ( I t can be s e e n t h a t B/C r a t i o i s same . )
// Note : a n s w e r g i v e n i n t h e book i s n o t a s much
a c c u r a t e a s c a l c u l a t e d by s c i l a b
61
Scilab code Exa 5.3 Calculate the BC ratio

1 // Exa 3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 IC =1500000; // i n Rupees
7 OMC =65000; // i n Rupees ( a n n u a l c o s t
f o r o p e r a t i n g and
maintenance )
8 B =225000; // i n Rupees ( a n n u a l s a v i n g and b e n e f i t s
9 ScrapValue =300000; // i n Rupees
10 life =30; // i n y e a r s
11 Irate =8; // i n %
12 // c a l c u l a t i n g p r e s e n t worth o f s a v i n g s
13 PWbenefits1 =0;
14 for i =1:30
15
PWbenefits1 = PWbenefits1 + B /(1+ Irate /100) ^ i ;
16 end
17 // c a l c u l a t i n g p r e s e n t worth o f s c r a p v a l u e
18
19 PWbenefits2 = B /(1+ Irate /100) ^ life ;
20 PWbenefits = PWbenefits1 + PWbenefits2 ; // t o t a l p r e s e n t
21
22
23
24
25
26
27
28
29
disp ( PWbenefits , P r e s n t worth o f t h e b e n e f i t s ) ;
// c a l c u l a t i n g p r e s e n t worth o f c o s t
PWcost1 = IC ; // same t h e i n i t i a l c o s t
// c a l c u l a t i n g p r e s e n t worth o f o p e r a t i n g and
maintenance c o s t
PWcost2 =0;
for i =1:30
PWcost2 = PWcost2 + OMC /(1+ Irate /100) ^ i ;
end
PWcost = PWcost1 + PWcost2 ; // t o t a l p r e s e n t worth o f
62
30
31
32
33
34
35
36
37
cost
disp ( PWcost , P r e s n t worth o f t h e c o s t ) ;
// // u s i n g c o n v e n t i o n a l B/C r a t i o // //
BCratio = PWbenefits / PWcost ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g c o n v e n t i o n a l method i s :
)
// // u s i n g m o d i f i e d B/C r a t i o // //
BCratio =( PWbenefits - PWcost2 ) / IC ; // f o r m u l a
disp ( BCratio , B C r a t i o u s i n g c o n v e n t i o n a l method i s :
)
63
Chapter 8
Product Process and Operation
Costing
Scilab code Exa 8.1 Process account and Abnormal Loss Acount
1 // Exa1
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 Production =1000 // u n i t s
7 CostOfProduction =1850; // i n Rs .
8 NormalLoss =10 // i n %
9 ActualLoss =150; // i n U n i t s
10 ScrapValue =50; // i n P a i s e / u n i t
11 NLoss = Production * NormalLoss /100; // i n U n i t s
12 UnitsProduced = Production - NLoss ; // i n U n i t s
13 CostPerUnit =( CostOfProduction -50*10^ -2* NLoss ) /
14
15
16
17
UnitsProduced ; // i n Rs .
AbnormalLoss = ActualLoss - NLoss ; // i n U n i t s
CostOfAbnormalLoss = AbnormalLoss * CostPerUnit ; // i n Rs .
disp ( P r o c e s s a c c o u n t : ) ;
disp ( P r o d u c t i o n i n U n i t s = + string ( Production ) +
Amount i n Rs . + string ( CostOfProduction ) ) ;
64
18
19
20
21
22
23
24
25
disp ( By Normal L o s s = + string ( NLoss ) +

Amount i n Rs . + string ( NLoss * ScrapValue *10^ -2) ) ;
disp ( By F i n i s h e d Goods = + string ( Production ActualLoss ) +
Amount i n Rs . + string (
CostPerUnit *( Production - ActualLoss ) ) ) ;
disp ( ) ;
disp ( Abnormal L o s s Account : ) ;
disp ( To P r o c e s s Account i n U n i t s = + string (
AbnormalLoss ) +
CostPerUnit * AbnormalLoss ) ) ;
disp ( By S c r a p V a l u e = + string ( AbnormalLoss ) +
AbnormalLoss * ScrapValue *10^ -2) ) ;
disp ( By C o s t i n g P r o f i t and L o s s A/ c +
Amount
i n Rs . + string ( AbnormalLoss * ScrapValue *10^ -2+
NLoss * ScrapValue *10^ -2) ) ;
disp ( T o t a l Amount i n Rs . + string (25+75) ) ;
Scilab code Exa 8.2 Equivalent Production

1 // Exa2
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 //Worki n p r o c e s s on Jan 1 , 40% c o m p l e t e
7 WorkComplete =1800 // u n i t s
8 ProcessDuringMonth =20000; // i n U n i t s
9 TransferedNextProcess =18000 // i n U n i t s
10 //Worki n p r o c e s s on Jan 3 1 , 50% c o m p l e t e
11 WorkComplete31jan =1000 // u n i t s
12
13 disp ( Opening I n v e n t o r y o f worki n p r o c e s s
E q u i v a l e n t U n i t s : + string ( WorkComplete *60/100) )

;
65
14
15
16
17
18
19
disp ( No . o f u n i t s c o m p l e t e d d u r i n g t h e month : ) ;
disp ( U n i t s Put i n t o p r o c e s s + string (
ProcessDuringMonth ) ) ;
disp ( LESS : U n i t s n o t c o m p l e t e d + string (
WorkComplete31jan ) ) ;
disp ( C l o s i n g s t o c k o f worki n p r o c e s s + string (
ProcessDuringMonth - WorkComplete31jan ) ) ;
disp ( 50% c o m p l e t e d d u r i n g t h e month = 500 ) ;
disp ( E q u i v a l e n t P r o d u c t i o n = 1080+19000+500 = 2 0 5 8 0
);
Scilab code Exa 8.3 Calculation of effective production and process cost
sheet
1 // Exa3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 MaterialsCost =1800; // i n Rs .
7 LabourCost =1700; // i n Rs .
8 Overhead =500; // i n Rs .
9 TotalCost = MaterialsCost + LabourCost + Overhead ; // i n Rs .
10 MaterialsPurchaseCost =37500; // i n Rs .
11 WagesAmounted =39900; // i n Rs .
12 OverheadAmounted =10640; // i n Rs .
13 ActualMaterialCost =34250; // i n Rs .
14 FinishedProduction =1250; // i n U n i t s
15 work_in_processInventory =250; // i n U n i t s
16
17 disp ( S t a t e m e n t o f P r o d u c t i o n : ) ;
18 disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
19 disp (
Units
Overhead
Incomplete
Total );
Material
66
Labour
disp ( Opening I n v e n t o r y ( t o be c o m p l e t e d 60%)

200
60%
120
120
120 ) ;
21 disp ( I n p u t
1300
100%
1300
1300
1300 );
22 disp (
20
1420
1420
1420 );
disp ( LESS : C l o s i n g S t o c k
250
20%
50 ) ;
24 disp (
23
25
40%
disp (
26
1370
1320
disp ( C u r r e n t C o s t
27
34250
39900
10640 );
disp ( C u r r e n t C o s t p e r u n i t
25
28
29
30
31
32
33
34
35
36
37
38
39
40
100
30.23
100 ) ;
1320 );
8.06
6 3 . 2 9 );
disp ( ) ;
disp ( C o s t o f o p e n i n g worki n p r o c e s s f o r c o m p l e t i o n
(200 u n i t s ) );
MaterialsToComplete =120*25; // i n Rs .
LabourToComplete =120*30.23; // i n Rs .
OverheadsToComplete =120*25; // i n Rs .
Total = MaterialsToComplete + floor ( LabourToComplete ) +
floor ( OverheadsToComplete ) ; // i n Rs .
//Worki n p r o c e s s a s on 1 s t Jun
WorkInJun =4000; // i n Rs .
CurrentProduction =(1250 -200) *63.29; // i n Rs .
// C o s t o f Worki n p r o c e s s 30 t h Jun ( 2 5 0 U n i t s )
MaterialC =200*25; // i n Rs .
LabourC =150*30.23; // i n Rs .
67
41
42
43
44
45
46
47
48
49
50
51
52
53
54
OverheadC =150*8.06; // i n Rs .
disp ( C o s t o f Worki n p r o c e s s 30 t h Jun ( 2 5 0 U n i t s ) :
);
disp ( C o s t s f o r : ) ;
disp ( M a t e r i a l : + string ( MaterialC ) ) ;
disp ( Labour : + string ( LabourC ) ) ;
disp ( Overhead : + string ( OverheadC ) ) ;
disp ( ) ;
disp ( P r o c e s s C o s t S h e e t ( Given i n T a b u l a r r form
below ) : );
disp ( S t a t e m e n t o f P r o d u c t i o n : ) ;
disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
disp ( P a r t i c u l a r s
Units
completion
Total Cost
C o s t Per
Unit );
disp ( Opening Worki n P r o c e s s ) ;
disp ( M a t e r i a l s
200
40%
1800 );
disp ( Labour
1700 );
55 disp ( Overhead
500
4000 );
56 disp ( I n p u t added : ) ;
57 disp ( M a t e r i a l s
1300
58 disp ( Labour
59
39900 );
disp ( Overhead
60
10640
disp (
34250 );
84790 );
88790 )
61 disp ( LESS : C l o s i n g worki n p r o c e s s
);
68
250
62
80%
63 disp ( Labour
5000 );
60%
64 disp ( Overhead
4534 );
60%
1209
4 3 . 0 0 );
65 disp ( C o s t o f P r o d u c t i o n
1250
100%
62.44 )
10743
78047
Scilab code Exa 8.4 Calculation of effective production and process account
1 // Exa4
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 OpeningStock =10000; // i n U n i t s
7 MaterialsCost =2250; // i n Rs .
8 Wages =650; // i n Rs .
9 Overhead =400; // i n Rs .
10 UnitsIntroduced =40000; // i n U n i t s
11 MaterialsCost1 =9250; // i n Rs .
12 Wages1 =4600; // i n Rs .
13 Overhead1 =3100; // i n Rs .
14 disp ( C a l c u l a t i o n o f E q u i v a l e n t P r o d u c t i o n )
15 disp ( ( Given i n form o f t a b l e b e l o w ) ) ;
16 disp (
17
Units
Materials
Labour and Overhead ) ;
disp ( Opening Worki n P r o c e s s
69
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
10000
10000
10000 );
disp ( U n i t s s t a r t e d and f i n i s h e d
20000
20000
20000 );
disp ( C l o s i n g worki n p r o c e s s
20000
20000
5000 );
disp ( M a t e r i a l 100% c o m p l e t e l a b o u r and o v e r h e a d 25%
)
disp ( E f f e c t i v e U n i t s
50000
50000
35000 )
disp ( ) ;
disp ( C o s t o f E q u i v a l e n t U n i t s u n d e r t h e a v e r a g e
c o s t method : ) ;
disp ( Element
Opening C o s t
C o s t put i n
Total Cost
Equivalent Production
C o s t Per U n i t ) ;
disp ( M a t e r i a l
2250
9250
11500
50000
0 . 2 3 );
disp ( Wages
650
4600
5250
35000
0 . 1 5 );
disp ( Overhead
400
3100
3500
35000
0 . 1 0 );
disp ( T o t a l ) ;
disp (
3300
16950
20250
0.48 )
// V a l u a t i o n o f worki n p r o c e s s ( 2 0 0 0 0 U n i t s
// l e t m a t e r i a l 100% c o m p l e t e = M1
M1 =20000*0.3; // i n Rs .
// l e t l a b o u r 25% c o m p l e t e = L1
L1 =5000*0.15; // i n Rs .
// l e t Overhead 25% c o m p l e t e = O1
O1 =5000*0.10; // i n Rs .
// T o t a l T1
T1 = M1 + L1 + O1 ; // i n Rs
// // c o s t o f f i n i s h e d g o o d s
70
40
41
42
43
44
45
46
47
48
49
50
51
52
53
// l e t m a t e r i a l M2, Labour L2 and Overgead O2

M2 =30000*0.30; // i n Rs .
L2 =30000*0.15; // i n Rs .
O2 =30000*0.10; // i n Rs .
// T o t a l T2
T2 = M2 + L2 + O2 ; // i n Rs .
disp ( ) ;
disp ( P r o c e s s a c c o u n t : ) ;
amount
Particulars
amount ) ;
disp ( Opening s t o c k
3000
c o m p l e t e d and t r a n s f e r e d
14400
);
9250
c l o s i n g s t o c k ( worki n p r o c e s s )
5850 );
disp ( Wages
4600 );
disp ( Overhead
3100 );
disp (
20250
20250 );
Scilab code Exa 8.5 Process accounts

1 // Exa5
2 clc ;
3 clear ;
4 close ;
5 disp ( P r o c e s s No . 1 ) ;
6 disp (
Cost per a r t i c l e
Cost per
Total Cost
a r t i c l e Total Cost );
7 disp ( To m a t e r i a l s
62.50
15000
By P r o c e s s No . 2 Account
27600 );
8 disp ( To Labour
33.34
8000
( Output T r a n s f e r e d )
71
115.00 )
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
;
disp ( To D i r e c t E x p e n s e s
10.83
2600
);
disp ( To I n d i r e c t E x p e n s e s
8.33
2000 );
disp (
115.00
27600
115.00
27860 );
disp ( ) ;
disp ( P r o c e s s No . 2 ) ;
disp (
Total Cost
Cost per
disp ( To P r o c e s s No . 1 Account
115.00
27600
By P r o c e s s No . 3 Account
270.00
64800 )
disp ( To m a t e r i a l s
20.83
5000 );
disp ( To Labour
83.33
2000 );
30.00
7200 );
disp ( To I n d i r e c t E x p e n s e s
20.84
5000 );
disp (
270.00
84800
270.00
64800 );
disp ( ) ;
disp ( P r o c e s s No . 3 ) ;
disp (
Total Cost
Cost per
disp ( To P r o c e s s No . 2 Account
270.00
64800
By F i n i s h e d S t o c k Account
320.00
76800 )
disp ( To m a t e r i a l s
8.33
2000 );
disp ( To Labour
25.00
72
6000 );
27 disp ( To D i r e c t E x p e n s e s
2500 );
28 disp ( To I n d i r e c t E x p e n s e s
1500 );
29 disp (
76800
320.00
76800 );
10.42
6.25
320.00
Scilab code Exa 8.6 Various process account and finished stock account
1 // Exa6
2 clc ;
3 clear ;
4 close ;
5 disp ( Copra C r u s h i n g P r o c e s s Account ) ;
6 disp ( P a r t i c u l a r s
Tons
Amount
12
13
14
Particulars
disp ( To Copra Used
By s a l e o f c o p r a r e s i d u e
disp ( Labour
By L o s s
disp ( E l e c t r i c Power
Sale of copra sacks
disp ( Sundry M a t e i a l s
Cost o f crude o i l );
disp ( R e p a i r s t o M a c h i n e r y
Rs . 6 4 6 . 6 7 p e r t o n
disp ( Steam
disp ( F a c t o r y E x p e n s e s
disp (
15
16
17
disp ( ) ;
disp ( R e f i n i n g P r o c e s s Account ) ;
Tons
7
8
9
10
11
73
Tons
500
175
Amount ) ;
200000
11000 );
2500
25 ) ;
600
400 ) ;
100
280
300
194000 );
600 ) ;
1320 );
500
205400
500
205400 );
Amount
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
Particulars
disp ( To Copra o i l
By s a l e o f byp r o d u c t s
disp ( Labour
By L o s s
c o s t o f r e f i n i n g o i l );
disp ( Sundry M a t e i a l s
Rs . 7 6 8 . 2 p e r t o n
disp ( Steam
disp (
Tons
300
45
Amount ) ;
194000
6750 );
1000
5);
360
250
300
300
2000
192050 );
330 ) ;
450 ) ;
660 ) ;
198800
198800 );
disp ( ) ;
disp ( F i n i s h i n g P r o c e s s Account ) ;
Tons
Amount
Particulars
Tons
Amount ) ;
disp ( To R e f i n i n g P r o c e s s
250
192050
By L o s s
2);
disp ( Labour
1500
c o s t o f f i n i s h e d o i l );
240
Rs . 7 8 4 . 6 8 p e r t o n
248
194600 );
140 ) ;
disp ( Steam
450 ) ;
220 ) ;
disp (
250
194600
250
198800 );
disp ( ) ;
disp ( F i n i s h e e d s t o c k a c c o u n t ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To f i n i s h i n g p r o c e s s
248
194600
To b a l a n c e a t Rs . 9 1 4 . 2
202100 );
disp ( To c o s t o f c a s k s
7500
);
disp (
202100
74
202100 );
Scilab code Exa 8.7 Process account and Abnormal wastage and gain
1 // Exa7
2 clc ;
3 clear ;
4 close ;
5 disp ( P r o c e s s A Account ) ;
6 disp ( P a r t i c u l a r s
Units
Particulars
Rupees ) ;
7 disp ( To u n i t s i s s u e d a t Rs . 1
10000
By n o r m a l w a s t a g e 3% o f 1 0 0 0 0
75 ) ;
8 disp ( p e r u n i t
Rupees
Units
10000
300
units sold
9
10
11
12
13
14
15
16
a t 25 P a i s a / u n i t ) ;
disp ( To s u n d r y m a t e r i a l s
By Abnormal w a s t a g e
350 ) ;
disp ( To l a b o u r
By p r o c e s s B o u t p u t t r a n s f e r e d
16625 );
disp (
10000
1000
200
5000
9500
1050 );
17050
10000
17050 );
disp ( ) ;
disp ( P r o c e s s B Account ) ;
Units
Rupees
Particulars
Units
Rupees ) ;
disp ( To P r o c e s s A ( o u t p u t r e c d . )
9500
16625
By n o r m a l w a s t a g e 5% o f 9 5 0 0 ) ;
75
17
18
19
20
21
22
23
24
25
26
27
28
disp (
u n i t s s o l d a t 50 P a i s a / u n i t
475
238 ) ;
1500
By p r o c e s s ( o u t p u t t r a n s f . )
9100
27300 );
disp ( To wages
8000 );
1188 );
disp ( To Abnormal E f f e c t i v e o r ) ;
disp ( Abnormal g a i n s
75
225 )
disp (
9575
27538
9575
27538 );
disp ( ) ;
disp ( P r o c e s s C Account ) ;
Units
Rupees
Particulars
Units
Rupees ) ;
disp ( To P r o c e s s B ( o u t p u t r e c d . )
9100
27300
By n o r m a l w a s t a g e 8% o f 9 1 0 0 ) ;
disp (
32
u n i t s s o l d a t Rs . 1/ u n i t
728 ) ;
disp ( To wages
By Abnormal Wastage
1156 );
By f i n i s h e d s t o c k ( o u t p u t )
34425 );
disp (
33
34
35
36309 );
// C a l c u l a t i o n o f Abnormal w a s t a g e and Abnormal Gain
// P r o c e s s A :
CostOfAbnormalWastageA =16975*200/9700; // i n Rupees
29
30
31
76
728
500 ) ;
6500
272
2009
8100
9100
36309
9100
36
37
38
39
40
41
42
43
44
45
// P r o c e s s B :
CostOfAbnormalWastageB =27075*75/9025; // i n Rupees
// P r o c e s s C :
CostOfAbnormalWastageC =35581*272/8372; // i n Rupees
disp ( CostOfAbnormalWastageA , P r o c e s s A : C o s t Of
Abnormal Wastage i n Rs . ) ;
disp ( CostOfAbnormalWastageB , P r o c e s s B : C o s t Of
disp ( CostOfAbnormalWastageC , P r o c e s s C : C o s t Of
disp ( ) ;
disp ( Abnormal w a s t a g e a c c o u n t ) ;
disp ( Dr .
Cr . ) ;
46 disp (
Units
Amount
Units
Amount ) ;
47 disp ( To P r o c e s s A
200
By s a l e s o f w a s t e d u n i t s : 200 ) ;
48 disp ( To P r o c e s s C
272
U n i t s o f A @ 25 p a i s a / u n i t
49 disp (
272 u n i t s o f P r o c e s s C @ Rs . 1/ u n i t
322 ) ;
50 disp (
By C o s t i n g P r o f i t & L o s s Account
1184 );
51 disp (
350
1156
50 ) ;
272
1506
1506 );
disp ( ) ;
disp ( Abnormal Gain Account ) ;
disp (
Units
Amount
Units
Amount ) ;
55 disp ( To s h o r t f a l l i n n o r m a l w a s t a g e o f 75
52
53
54
77
38
By P r o c e s s A
75
56 disp ( u n i t s @ 50 P a i s a / e a c h ) ;
57 disp ( To C o s t i n g P r o i t and L o s s Account
187 ) ;
58 disp (
225
225 ) ;
225 ) ;
Scilab code Exa 8.8 Computation of Equivalent and analysis of Cost sheet
1 // Exa7
2 clc ;
3 clear ;
4 close ;
5 disp ( 1 . S t a t e m e n t o f p r o d u c t i o n
6
7
8
9
10
11
12
13
14
15
16
17
18
19
u n i t s f o r June
2 0 1 0 : );
disp (
disp ( Completed U n i t s
disp ( (+) C l o s i n g worki n p r o c e s s
disp (
disp ( ( ) Opening worki n p r o c e s s
disp ( New U n i t s ( I n p u t )
disp ( ) ;
disp ( 2 . Computation o f e q u i v a l e n t ) ;
disp (
Units
Incomplete %
Materials
Overhead ) ;
disp ( ( i ) ) ;
disp ( W. I . P I n v e n t o r y on 1 s t June ( 4 0%
disp (
400
60%
240
;
disp ( Add : I n p u t
2600
2600
);
disp (
78
Units );
2500 );
500 ) ;
3000 );
400 ) ;
2600 );
Labour
complete ) );
240
240 )
2600
2600
36
3000
20%
2840
2840
2840
);
disp ( L e s s : W. I . P I n v e n t o r y on 30 t h June
500
40%
100
200
200 )
;
disp (
2500
2740
2640
2640
);
disp ( ) ;
disp ( S t a t e m e n t o f c o s t p e r u n i t ) ;
disp (
T o t a l Amoount
E q u i v a l e n t s Cost per );
disp (
( Rs . )
Units
U n i t Rs . )
68500
2740
2 5 . 0 0 );
disp ( Labour
79800
2640
3 0 . 2 3 );
disp ( Overhead
21280
2640
8 . 0 6 );
disp (
169580
63.29 )
disp ( ) ;
disp ( 3 . P r o c e s s c o s t f o r t h e month o f June 2 0 1 0 ) ;
disp (
Amount
per u n i t );
disp ( M a t e r i a l s ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
3600
2 2 . 5 0 );
disp ( Labour ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
3400
2 1 . 2 5 );
disp ( Overhead ( 1 6 0 u n i t s i . e . , 4 0% o f 400 u n i t s )
1000
6.25 )
disp (
37
38
39
8000
5 0 . 0 0 );
disp ( ) ;
disp ( Put i n p r o c e s s ) ;
disp ( M a t e r i a l s ( 2 7 4 0 u n i t s )
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
79
40
41
42
43
44
45
46
47
48
49
50
51
52
68500
2 5 . 0 0 );
disp ( Wages ( 2 6 4 0 u n i t s )
79800
30.23 )
disp ( O v e r h e a d s ( 2 6 4 0 u n i t s )
21240
8 . 0 6 );
disp (
169580
6 3 . 2 9 );
disp (
Total
177580 );
disp ( ) ;
disp ( A n a l y s i s o f C o s t s h e e t ( FIFO ) ) ;
disp ( C o s t o f U n i t s Completed and t r a n s f e r e d
Units
Rate
Amount ) ;
disp (
Equivalent
Rs .
Rs . )
disp ( Worki n p r o g r e s s 1 s t June ( 4 0 0 u n i t s )
160
50.00
8000 );
disp ( M a t e r i a l s f o r c o m p l e t i n g
240
25.00
6000 );
disp ( Labour f o r c o m p l e t i n g
240
30.23
7252 );
disp ( Overhead f o r c o m p l e t i n g
240
8.06
1934 );
disp ( C o s t o f 400 u n i t s
23186
);
53 disp ( Put i n p r o c e s s and c o m p l e t e d ( 2 1 0 0 u n i t s )
6329
132909 );
54 disp ( C o s t o f 2 5 0 0 u n i t s
156095
);
55 disp ( V a l u a t i o n o f work i n p r o c e s s 30 t h j u n e ( 5 0 0
u n i t s ) );
400
25.00
10000 );
57 disp ( Labour
300
30.23
9068 );
58 disp ( Overhead
80
300
8.06
2417 )
59 disp ( C o s t o f 500 u n i t s (W. I . P)
21485 );
Total
disp (
P r o c e s s c o s t Rs . 1 7 7 5 8 0 )
61 disp ( ) ;
62 disp ( P r o c e s s C o s t Account ) ;
63 disp (
Units
Cost per
Amount
Units
Cost per
Amount )
;
64 disp (
unit
u n i t );
65 disp (
Rs .
Rs .
Rs .
Rs .
);
66 disp ( To W. I . P 1 s t June
400
50.00
8000
By f i n i s h e d
2500
62.44
156095
);
2600
25.00
68500
By s t o c k Account ) ;
68 disp ( Labour
30.23
79800
By W. I . P 30 t h June
500
42.97
21485
);
69 disp ( O v e r h e a d s
8.06
21280 )
;
70 disp (
3000
177580
3000
177580
);
60
Scilab code Exa 8.9 Output transfered and closing and opening work in
progress
1 // Exa9
2 clc ;
3 clear ;
81
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
close ;
disp (
Amount
Units );
disp ( P r o d u c t i o n
Units
%
Equivalent
%
E q u i v a l e n t );
disp (
Completion
Units
Completion
Units );
disp ( F i n i s h e d & T r a n s f e r e d
8000
100%
8000
100%
8000 );
disp ( C l o s i n g worki n p r o g r e s s 2 0 0 0
100%
2000
50%
1000 );
disp ( T o t a l P r o d u c t i o n
10000
10000
9000 );
disp ( ) ;
disp ( S t a t e m e n t o f c o s t ) ;
disp (
Material
Labour
Overhead
Total );
disp (
Rs .
Rs .
Rs .
Rs . ) ;
disp ( C o s t o f o p e n i n g worki n p r o g r e s s
7500
3000
1500
12000 );
disp ( C o s t i n and d u r i n g t h e p r o c e s s
100000
78000
39000
217000 );
disp (
Total cost
107500
81000
40500
229000 );
disp ( E q i v a l e n t u n i t s
10000
9000
9000 );
disp ( C o s t p e r u n i t
10.75
9.00
4.50
2 4 . 2 5 );
disp ( ) ;
disp (8000*24.25 , ( a ) V a l u e o f o u t p u t t r a n s f e r e d :
8 0 0 0 u n i t s @ Rs . 2 4 . 2 5 i s ) ;
disp ( ( b ) V a l u e o f C l o s i n g worki n p r o g r e s s ) ;
disp (2000*10.75 , M a t e r i a l
2000 u n i t s @ 1 0 . 7 5 : )
;
disp (1000*9.00 , Labour
1000 u n i t s @ 9 . 0 0 : );
disp (1000*4.50 , Overhead
1000 u n i t s @ 4 . 5 0 : );
disp (194000+35000 , T o t a l Rs . = ) ;
82
Scilab code Exa 8.10 Closing Inventory and material transfered

1 // Exa10
2 clc ;
3 clear ;
4 close ;
5 disp ( As s p o i l a g e
occurs during process , i t s cost

w i l l be c h a r g e d b o t h t o t h e c o m p l e t e p r o d u c t i o n
and t h e c l o s i n g i n v e n t o r y . ) ;
6 disp (
Element U n i t s
Material
Labour
Overhead ) ;
7 disp (
Kgs .
Kgs .
Kg . ) ;
8 disp (
Rs .
Rs .
Rs . ) ;
9 disp ( C u r r e n t p r o c e s s a c c o o u n t
27000
50000
40000 );
10 disp ( P r o c e s s c o s t p e r u n i t
2.5
5
4);
11 disp ( C l o s i n g I n v e n t o r y
125000
5000
4000 );
12 disp ( C o s t o f m a t e r i a l t r a n s f e r e d t o t h e s e c o n d
p r o c e s s : );
13 Opening_Inventory =10000; // i n Rs
14 Process_Cost =117500; // i n Rs
15 Closing_Inventory =21500; // i n Rs
16 disp ( Opening_Inventory + Process_Cost Closing_Inventory , C o s t o f m a t e r i a l t r a n s f e r e d t o
t h e s e c o n d p r o c e s s= Rs . )
17 disp (5000*2.5 , M a t e r i a l
=Rs . ) ;
18 disp (5000*5*20/100 , Labour
=Rs . ) ;
19 disp (5000*4*20/100 , Overhead
=Rs . ) ;
20 disp (5000*2.5+5000*5*20/100+5000*4*20/100 , T o t a l= Rs
. )
83
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
disp ( ( b ) I t s p o i l a g e o c c u r s a t t h e end o f t h e
p r o c e s s , i t s c o s t w i l l be c h a r g e d o n l y t o t h e
f i n i s h e d p r o d u c t i o n and n o t t o t h e c l o s i n g
i n v e n t o r y . );
disp ( The c a l c u l a t i o n w i l l be a s f o l l o w s : ) ;
disp ( E f f e c t i v e U n i t s
Material
Labour
Overhead ) ;
disp ( From :
)
disp ( Opening i n v e n t o r y
0
3000
3000 );
disp ( C u r r e n t i n p u t
7000
7000
7000 );
disp ( T o t a l c o m p l e t e u n i t s
7000
10000
10000 );
disp ( C l o s i n g i n v e n t o r y
5000
1000
1000 );
disp ( E f f e c t i v e u n i t s
12000
11000
11000 );
disp ( P r o c e s s c o s t
Rs .
27500
Rs . 5 0 0 0 0
Rs . 4 0 0 0 0 ) ;
disp ( P r o c e s s c o s t p e r u n i t
2.29
4.55
3 . 6 3 );
disp ( C l o s i n g i n v e n t o r y
Rs . ) ;
5 0 0 0 x Rs . 2 . 2 9
=11450 ) ;
disp ( Labour
5 0 0 0 x Rs . 4 . 5 5 x 20% =4550 ) ;
disp ( Overhead
5 0 0 0 x Rs . 3 . 6 3 x 20% =3630 ) ;
disp (
=Rs . 1 9 6 3 0
);
disp (10000+117500 -19630 , C o s t o f m a t e r i a l s
t r a n s f e r e d t o s e c o n d p r o c e s s= Rs . ) ;
Scilab code Exa 8.11 Process account and Unrealised profit

84
1 // Exa11
2 clc ;
3 clear ;
4 close ;
5 disp ( Dr .
A A/ c
6 disp (
7
disp (
disp ( To
By
9 disp ( To
By
10 disp ( To
11
disp (
8
Process
Cr . ) ;
Amount
Amount ) ;
Rs .
Rs . ) ;
M a t e r i a l Consumed
2000
c l o s i n g Stock
1000 );
Labour
3000
P r o c e s s B( o / p T r a n s f e r e d )
5000 );
P r o f i t ( 2 0% on t r a n s f e r p r i c e )
1000 )
6000
6000 );
disp ( ) ;
disp ( Dr .
B A/ c
14 disp (
12
13
15
16
17
18
19
20
21
22
23
Process
Cr . ) ;
Amount
Amount ) ;
disp (
Rs .
Rs . ) ;
disp ( To P r o c e s s A( T r a n s f e r o f o /p )
5000
By c l o s i n g S t o c k
2000
)
disp ( To M a t e r i a l
3000
By P r o c e s s C( o /p T r a n s f e r e d )
10000 );
disp ( To Labour
2000 );
disp ( To P r o f i t ( 2 0% on t r a n s f e r p r i c e )
2000 )
disp (
12000
12000 );
disp ( ) ;
disp ( Dr .
Process
C A/ c
Cr . ) ;
disp (
Amount
Amount ) ;
85
24
disp (
25
27
28
29
disp ( To P r o c e s s B( T r a n s f e r o f o / p )
By c l o s i n g S t o c k
)
disp ( To M a t e r i a l
By F i n i s h e d s t o c k ( o /p T r a n s f e r e d )
disp ( To Labour
disp ( To P r o f i t ( 2 0% on t r a n s f e r p r i c e )
disp (
30
31
32
disp ( ) ;
disp ( F i n i s h e d S t o c k Accouont ) ;
disp (
26
33
34
35
36
Rs .
Rs . ) ;
10000
3000
1000
15000 );
4000 );
3000 )
18000
18000 );
Amount
Amount ) ;
disp (
Rs .
Rs . ) ;
disp ( To P r o c e s s C( Output R e c i e v e d )
15000
By S a l e s
18000
)
disp ( To P r o f i t
5000
By C l o s i n g S t o c k
2000 );
disp (
20000
18000 );
Scilab code Exa 8.12 Process account and statement of profit

1 // Exa12
2 clc ;
3 clear ;
4 close ;
5 disp ( P r o c e s s ( i ) Account ) ;
6 disp (
7
disp ( To Raw m a t e r i a l
86
Tons
Tons
1000
Amount
Amount ) ;
200000
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
By w e i g h t l o s t
50 ) ;
disp ( To Mfg . wages & e x p e n s e s
87500
By S c r a p
50
2500 );
disp ( To p r o f i t
9960
By S a l e s
300
105000 );
disp (
By t r a n s f e r t o p r o c e s s i i
600
189960 );
disp (
1000
297460
1000
297460 );
disp ( ) ;
disp ( P r o c e s s ( i i ) Account ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To t r a n s f e r from p r o c e s s i
6000
189960
60 ) ;
39500
By S c r a p
30
1500 );
13525
By S a l e s
255
127500 );
disp (
By
t r a n s f e r to p r o c e s s i i
255
113985 );
disp (
1000
297460
600
242985 );
disp ( ) ;
disp ( P r o c e s s ( i i I ) Account ) ;
disp (
Tons
Amount
Tons
Amount ) ;
disp ( To t r a n s f e r from p r o c e s s i i
255
113895
51 ) ;
10710
By S c r a p
51
2550 );
255
By S a l e s
153
122400 );
disp (
255
124950
255
124950 );
disp ( ) ;
disp ( S t a t e m e n t o f P r o f i t : ) ;
87
i
9960 );
30 disp ( P r o f i t a s p e r p r o c e s s
ii
13525 );
31 disp ( P r o f i t a s p e r p r o c e s s i i i
255 ) ;
32 disp ( T o t a l P r o f i t
29
disp ( P r o f i t a s p e r p r o c e s s
disp ( L e s s : Management E x p e n s e s
disp ( L e s s : S e l l i n g E x p e n s e s
27500 );
35 disp (
3760 );
33
34
23740 );
17500 );
10000
Net L o s s
Scilab code Exa 8.13 Labour cost and value of work in progress
1 // Exa13
2 clc ;
3 clear ;
4 close ;
5 disp ( U n i t O p e r a t i o n c o s t ) ;
6 disp (
% of r e j e c t s
labour cost per
100 ) ;
disp (
t o t h e o /p
Ratio /100 f o r
on o /p o f
each );
8 disp (
o f each
cost of f i n a l
Labour c o s t
operation
7/2
%
% );
9 disp ( O p e r a t i o n I n p u t R e j e c t s Output
operation %
Output ) ;
10 disp (
1
6000
1500
4500
33.33
200
10800
180
240 360 ) ;
7
88
11
disp (
12
disp (
13
disp (
14
disp (
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5625
375
150
150 210 ) ;
3
5250
140
280 364 ) ;
4
6500
130
130 156 ) ;
5
4800
120
120 120 ) ;
5250
7875
7.14
140
375
4875
13650
7.69
260
500
6000
7800
8.33
120
800
4000
4800
20
100
disp (
100
44925
800
920
1210 );
disp ( ) ;
disp ( On o u t p u t o f e a c h o p e r a t i o n =7/4 ) ;
disp ( On f i n a l o u t p u t o f e a c h o p e r a t i o n =( 8 6) / 1 0 0 ) ;
disp ( ( a . ) Column 6 i n d i c a t e s t h e numbers o f u n i t s
t o be put i n hand i n e a c h o p e r a t i o n s o t h a t a t
t h e end o f t h e f i n a l o p e r a t i o n , 1 0 0 good u n i t s a r e
o b t a i n e d . Thus i n t h i s c a s e , 200 u n i t s would be
t h e i n p u t t o o b t a i n 100 u n i t s o f good o u t p u t a t
t h e end o f t h e 5 t h o p e r a t i o n . ) ;
disp ( round (100+100*20/100) , Output 5 = ) ;
disp ( round (120+120*8.33/100) , Output 4 = ) ;
disp (1210 -800 , ( b . ) The l a b o u r c o s t o f w a s t e p e r 100
u n i t s = ) ;
disp ( ( c . ) The work i n p r o g r e s s can be computed a s
f o l l o w s : work i n p r o g r e s s a t t h e end o f ) ;
disp ( O p e r a t i o n No . 1 = u n i t s i n p r o g r e s s ( 2 4 0 ) / 1 0 0
);
disp ( O p e r a t i o n No . 2 = u n i t s i n p r o g r e s s
(240+150+2407.14/100) /100 );
89
29
30
31
32
33
34
35
36
37
38
39
( 4 0 7 . 1 4 + 2 8 0 + 4 0 7 . 1 4 7 . 6 9 / 1 0 0 ) /100 );
( 7 1 8 . 4 6 + 1 3 0 + 7 1 8 . 4 6 8 . 3 3 / 1 0 0 ) /100 );
(908.34+60+908.3420/100) /100 );
disp ( V a l u a t i o n o f work i n p r o g r e s s ) ;
disp ( S t a g e ( a t t h e end o f )
c o m p o ne n t s
p e r 100 u n i t s
Total Value );
disp ( O P e r a t i o n
Rs
Rs ) ;
disp ( 1 .
1000
240
2400 );
disp ( 2 .
500
407.14
2 0 3 5 . 7 0 );
disp ( 3 .
750
718.46
5 3 8 8 . 4 5 );
disp ( 4 .
1000
908.34
9 0 8 3 . 4 0 );
disp ( 5 .
500
1210
6050 );
90
Value
Chapter 9
standard costing
Scilab code Exa 9.1 Calculate material variances

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
// Exa1
clc ;
clear ;
close ;
SQ =4000 // i n s q . f t .
AQ =4300 // i n s q . f t .
SP =5 // i n r u p e e s p e r s q . f t .
AP =5.50 // i n r u p e e s p e r s q . f t .
// ( i ) MCV
MCV =( SQ * SP ) -( AQ * AP ) ; // i n r u p e e s
// ( i i ) MPV
MPV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MUV
MUV = SP *( SQ - AQ ) ; // i n r u p e e s
disp ( MCV , MCV= ) ;
disp ( MPV , MPV= ) ;
disp ( MUV , MUV= ) ;
disp ( Note : )
disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
;
91
21
disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
// Exa2
clc ;
clear ;
close ;
// For f i r s t y e a r
P1 =500; // i n r u p e e s
n =3; // i n y e a r s
T =1 // i n y e a r
I1st =( P1 * r * T ) /100;
A1 = P1 + I1st ;
// For s e c o n d y e a r
P2 = A1 ;
I2nd =( P2 * r * T ) /100;
A2 = P2 + I2nd ;
// For t h i r d y e a r
P3 = A2 ;
I3rd =( P3 * r * T ) /100;
A3 = P3 + I3rd ;
// compound i n t e r e s t o r 3 y e a r s
CI = A3 - P1 ;
)

1 // Exa3
2 clc ;
92
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 SQ =100; // i n Kgs
7 actualoutput =240000; // i n Kgs
8 stdoutput =80; // i n Kgs
9 costofmaterial =346500; // i n Rupees
10 SQa =( SQ * actualoutput ) / stdoutput ; //SQa i s SQ f o r
a c t u a l output
SP =1.20; // i n Rupees p e r Kg
AQ =315000; // i n Kg
AP = costofmaterial / AQ ; // i n Rupees p e r Kg
// ( i ) MUV
MUV = SP *( SQa - AQ ) ; // i n r u p e e s
// ( i i ) MPV
// ( i i i ) MCV
MCV =( SQa * SP ) -( AQ * AP ) ; // i n r u p e e s
disp ( Note : )
)
;
25 disp ( P o s i t i v e v a r i a n c e s i n d i c a t e f a v o u r a b l e v a l u e
)
11
12
13
14
15
16
17
18
19
20
21
22
23
24

1 // Exa3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 quantity =3000; // m a t e r i a l p u r c h a s e d
93
7 value =9000; // r u p e e s f o r m a t e r i a l p u r c h a s e d
8 SQ =25;
9 stdoutput =1; // i n t o n n e s
10 actualoutput =80; // i n t o n n e s
11 //SQ f o r a c t u a l o u t p u t
12 SQa =( SQ * actualoutput ) / stdoutput ;
13 // M a t e r i a l consumed o r AQ
14 AQ =3000+100 -600; // o p e n i n g s t o c k =100; P u r c h a s e d = 3 0 0 0 ;
c l o s i n g s t o c k =600;
SP =2; // r u p e e s p e r u n i t
AP = value / quantity ; // r u p e e s p e r u n i t
// ( i ) MUV
MUV = SP *( SQa - AQ ) ; // i n r u p e e s
// ( i i ) MPV
// ( i i i ) MCV
MCV =( SQa * SP ) -( AQ * AP ) ; // i n r u p e e s
disp ( Note : ) ;
)
;
);
15
16
17
18
19
20
21
22
23
24
25
26
27

1 // Exa3
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 SQa =100 // i n Kgs
7 AQa =90 // i n Kgs
94
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
SPa =2 // i n r u p e e s p e r Kgs
APa =2.20 // i n r u p e e s p e r Kgs
SQb =50 // i n kg
AQb =60 // i n Kg
SPb =5 // i n r u p e e s p e r Kg
APb =4.50 // i n r u p e e s p e r Kg
// ( i ) MUVa
MUVa = SPa *( SQa - AQa ) ; // i n r u p e e s
// ( i i ) MPVa
MPVa = AQa *( SPa - APa ) ; // i n r u p e e s
// ( i i i ) MCVa
MCVa =( SQa * SPa ) -( AQa * APa ) ; // i n r u p e e s
// ( i ) MUVb
MUVb = SPb *( SQb - AQb ) ; // i n r u p e e s
// ( i i ) MPVb
MPVb = AQb *( SPb - APb ) ; // i n r u p e e s
// ( i i i ) MCVb
MCVb =( SQb * SPb ) -( AQb * APb ) ; // i n r u p e e s
RSQa =( SQa *150) /( SQa + SQb ) ;
RSQb =( SQb *150) /( SQa + SQb ) ;
// ( i v ) MMVa
MMVa = SPa *( RSQa - AQa ) ;
// ( i v ) MMVb
MMVb = SPb *( RSQb - AQb ) ;
// ( v ) MSUVa
MSUVa = SPa *( SQa - RSQa ) ;
// ( v ) MSUVb
MSUVb = SPb *( SQb - RSQb ) ;
// m a t e r i a l A
disp ( V a r i a n c e s f o r m a t e r i a l A )
disp ( MUVa , MUV= ) ;
disp ( MPVa , MPV= ) ;
disp ( MCVa , MCV= ) ;
disp ( MMVa , MMV= ) ;
disp ( MSUVa , MSUV= )
// m a t e r i a l B
disp ( V a r i a n c e s f o r m a t e r i a l B )
95
disp ( MUVb , MUV= ) ;

disp ( MPVb , MPV= ) ;
disp ( MCVb , MCV= ) ;
disp ( MMVb , MMV= ) ;
disp ( MSUVb , MSUV= )
disp ( Note : )
)
;
)
46
47
48
49
50
51
52
Scilab code Exa 9.6 Calculate material variances when mix ratio is same
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
// Exa 6
clc ;
clear ;
close ;
// mix r a t i o i s t h e same
SQa =100 // i n Kgs
AQa =120 // i n Kgs
SQb =50 // i n kg
AQb =60 // i n Kg
// ( 1 )
Material cost variance
// ( 2 )
Material price variance
// ( 3 )
Material usage variance
96

// ( 4 )
M a t e r i a l mix v a r i a n c e
RSQa =( SQa *180) /(150) ;
RSQb =( SQb *180) /(150) ;
// ( 4 )
M a t e r i a l sub u s a g e v a r i a n c e
// m a t e r i a l A
disp ( V a r i a n c e s f o r m a t e r i a l A )
disp ( MUVa , MUV= ) ;
disp ( MPVa , MPV= ) ;
disp ( MCVa , MCV= ) ;
disp ( MSUVa , MSUV= )
// m a t e r i a l B
disp ( V a r i a n c e s f o r m a t e r i a l B )
disp ( MUVb , MUV= ) ;
disp ( MPVb , MPV= ) ;
disp ( MCVb , MCV= ) ;
disp ( MSUVb , MSUV= )
disp ( Note : )
)
;
)
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
Scilab code Exa 9.7.a Calculate material cost variances

1 // Exa 7 ( i )
2 clc ;
3 clear ;
4 close ;
97
// mix r a t i o i s n o t same
SQa =10 // i n Kgs
AQa =10 // i n Kgs
APa =7 // i n r u p e e s p e r Kgs
SQb =8 // i n kg
AQb =9 // i n Kg
APb =7 // i n r u p e e s p e r Kg
SQc =4 // i n kg
AQc =5 // i n Kg
SPc =12 // i n r u p e e s p e r Kg
APc =11 // i n r u p e e s p e r Kg
// ( 1 )
MCVc =( SQc * SPc ) -( AQc * APc ) ; // i n r u p e e s
disp ( MCVa , MCVa= ) ;
disp ( MCVb , MCVb= ) ;
disp ( MCVc , MCVc= ) ;
disp ( Note : )
)
;
)
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Scilab code Exa 9.7.b Calculate material usage variance

1 // Exa 7 ( i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 // mix r a t i o i s n o t same
98
SQa =10 // i n Kgs

AQa =10 // i n Kgs
SQb =8 // i n kg
AQb =9 // i n Kg
SQc =4 // i n kg
AQc =5 // i n Kg
// ( 2 )
MUVc = SPc *( SQc - AQc ) ; // i n r u p e e s
disp ( MUVa , MUVa= ) ;
disp ( MUVb , MUVb= ) ;
disp ( MUVc , MUVc= ) ;
disp ( Note : )
)
;
);
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Scilab code Exa 9.7.c Calculate material price variance

1 // Exa 7 ( i i i )
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 // mix r a t i o i s n o t same
7 SQa =10 // i n Kgs
8 AQa =10 // i n Kgs
99
SQb =8 // i n kg
AQb =9 // i n Kg
SQc =4 // i n kg
AQc =5 // i n Kg
// ( 2 )
MPVc = AQc *( SPc - APc ) ; // i n r u p e e s
disp ( MPVa , MPVa= ) ;
disp ( MPVb , MPVb= ) ;
disp ( MPVc , MPVc= ) ;
disp ( Note : )
)
;
)
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
Scilab code Exa 9.7.d Calculate material mix variance

1
2
3
4
5
6
7
8
9
10
// Exa 7 ( i v )
clc ;
clear ;
close ;
SQa =10 // i n Kgs
AQa =10 // i n Kgs
100
SQb =8 // i n kg
AQb =9 // i n Kg
SQc =4 // i n kg
AQc =5 // i n Kg
// ( 4 )
RSQa =( SQa *24) /(22) ;
RSQb =( SQb *24) /(22) ;
RSQc =( SQc *24) /(22)
MMVc = SPc *( RSQc - AQc ) ;
disp ( MMVc , MMV= ) ;
disp ( Note : )
)
;
);
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Scilab code Exa 9.7.e Calculate material sub usage variances

1
2
3
4
5
6
7
8
9
// Exa 7 ( v )
clc ;
clear ;
close ;
SQa =10 // i n Kgs
AQa =10 // i n Kgs
101
SQb =8 // i n kg
AQb =9 // i n Kg
SQc =4 // i n kg
AQc =5 // i n Kg
// ( 5 )
MSUVc = SPc *( SQc - RSQc ) ;
disp ( MSUVa , MSUV= ) ;
disp ( MSUVb , MSUV= ) ;
disp ( MSUVc , MSUV= ) ;
disp ( Note : )
)
;
);
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27

1
2
3
4
5
6
7
8
9
10
11
// Exa 8
clc ;
clear ;
close ;
SQx =54 // i n Kgs
AQx =40 // i n Kgs
SPx =6 // i n r u p e e s p e r Kgs
APx =6 // i n r u p e e s p e r Kgs
SQy =44 // i n kg
102
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
AQy =50 // i n Kg
SPy =5 // i n r u p e e s p e r Kg
APy =5 // i n r u p e e s p e r Kg
SQz =20 // i n kg
AQz =24 // i n Kg
SPz =7 // i n r u p e e s p e r Kg
APz =7 // i n r u p e e s p e r Kg
// ( 1 )
MCVx =( SQx * SPx ) -( AQx * APx ) ; // i n r u p e e s
MCVy =( SQy * SPy ) -( AQy * APy ) ; // i n r u p e e s
MCVz =( SQz * SPz ) -( AQz * APz ) ; // i n r u p e e s
// ( 2 )
MPVy = AQy *( SPy - APy ) ; // i n r u p e e s
MPVx = AQx *( SPx - APx ) ; // i n r u p e e s
MPVz = AQz *( SPz - APz ) ; // i n r u p e e s
// ( 3 )
MUVx = SPx *( SQx - AQx ) ; // i n r u p e e s
MUVy = SPy *( SQy - AQy ) ; // i n r u p e e s
MUVz = SPz *( SQz - AQz ) ; // i n r u p e e s
// ( 4 )
RSQx =( SQx *114) /(118) ;
RSQy =( SQy *114) /(118) ;
RSQz =( SQz *114) /(118)
MMVx = SPx *( RSQx - AQx ) ;
MMVy = SPy *( RSQy - AQy ) ;
MMVz = SPz *( RSQz - AQz ) ;
// ( 5 )
MSUVx = SPx *( SQx - RSQx ) ;
MSUVy = SPy *( SQy - RSQy ) ;
MSUVz = SPz *( SQz - RSQz ) ;
// m a t e r i a l C o s t v a r i a n c e
disp ( m a t e r i a l C o s t v a r i a n c e s : )
disp ( MCVx , MCVx= ) ;
disp ( MCVy , MCVy= ) ;
disp ( MCVz , MCVz= ) ;
// m a t e r i a l Usage v a r i a n c e
disp ( m a t e r i a l Usage v a r i a n c e s : )
disp ( MUVx , MUVx= ) ;
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disp ( MUVy , MUVy= ) ;

disp ( MUVz , MUVz= ) ;
// m a t e r i a l P r i c e v a r i a n c e
disp ( m a t e r i a l P r i c e v a r i a n c e s : )
disp ( MPVx , MPVx= ) ;
disp ( MPVy , MPVy= ) ;
disp ( MPVz , MPVz= ) ;
disp ( As s t a n d a r d p r i c e s and a t u a l p r i c e s a r e same ,
h e n c e t h e r e i s no m a t e r i a l P r i c e v a r i a n c e )
// m a t e r i a l Mix v a r i a n c e
disp ( m a t e r i a l mix v a r i a n c e s : )
disp ( MMVx , MMVx= ) ;
disp ( MMVy , MMVy= ) ;
disp ( MMVz , MMVz= ) ;
// m a t e r i a l Sub u s a g e v a r i a n c e
disp ( m a t e r i a l sub Usage v a r i a n c e s : )
disp ( MSUVx , MSUVx= )
disp ( MSUVy , MSUVy= )
disp ( MSUVz , MSUVz= )
disp ( Note : )
)
;
)

1 // Exa 9
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 SQx1 =120 // i n Kgs
7 AQx =112 // i n Kgs
8 SPx =5 // i n r u p e e s p e r Kgs
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APx =5 // i n r u p e e s p e r Kgs
SQy1 =80 // i n kg
AQy =88 // i n Kg
SPy =10 // i n r u p e e s p e r Kg
APy =10 // i n r u p e e s p e r Kg
Loss =30; // i n %
// c a l c u l a t i o n o f SQ f o r a c t u a l o u t p u t
StandardYield =( SQx1 + SQy1 ) -(( SQx1 + SQy1 ) * Loss ) /100; //
i n kg
ActualYield =150; // i n kg
SQx =( SQx1 * ActualYield ) / StandardYield ; // i n kg
SQy =( SQy1 * ActualYield ) / StandardYield ; // i n kg
// ( 1 )
MCVx =( SQx * SPx ) -( AQx * APx ) ; // i n r u p e e s
MCVy =( SQy * SPy ) -( AQy * APy ) ; // i n r u p e e s
// ( 2 )
MPVy = AQy *( SPy - APy ) ; // i n r u p e e s
MPVx = AQx *( SPx - APx ) ; // i n r u p e e s
// ( 3 )
MUVx = SPx *( SQx - AQx ) ; // i n r u p e e s
MUVy = SPy *( SQy - AQy ) ; // i n r u p e e s
// ( 4 )
RSQx =( SQx *200) /(200) ;
RSQy =( SQy *200) /(200) ;
MMVx = SPx *( SQx1 - AQx ) ;
MMVy = SPy *( SQy1 - AQy ) ;
// ( 5 )
Material Yield variance
TotalSC = SQx1 * SPx + SQy1 * SPy ; // i n Rs
TotalSQ = SQx1 + SQy1 -(( SQx1 + SQy1 ) * Loss ) /100; // i n Kg
SCperunit = TotalSC / TotalSQ ; // i n Rs
RSY =( StandardYield *(200) ) /(200) ;
MYV = SCperunit *( ActualYield - RSY ) ;
disp ( MCVx , MCVx= ) ;
disp ( MCVy , MCVy= ) ;
disp ( MCVx + MCVy , T o t a l MCV= ) ;
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disp ( MPVx , MPVx= ) ;
disp ( MPVy , MPVy= ) ;
disp ( MPVx + MPVy , T o t a l MPV= ) ;
disp ( As s t a n d a r d p r i c e s and a t u a l p r i c e s a r e same ,
h e n c e t h e r e i s no m a t e r i a l P r i c e v a r i a n c e )
disp ( MUVx , MUVx= ) ;
disp ( MUVy , MUVy= ) ;
disp ( MUVx + MUVy , T o t a l MUV= ) ;
disp ( MMVx , MMVx= ) ;
disp ( MMVy , MMVy= ) ;
disp ( MMVx + MMVy , T o t a l MMV= ) ;
// m a t e r i a l Y i e l d v a r i a n c e
disp ( m a t e r i a l Y i e l d v a r i a n c e s : )
disp ( MYV , MYV= ) ;
disp ( Note : )
)
;
)

1 // Exa 10
2 clc ;
3 clear ;
4 close ;
5 // g i v e n d a t a :
6 SQa1 =200 // i n Kgs
7 AQa =250 // i n Kgs
8 SPa =3 // i n r u p e e s p e r Kgs
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SQb1 =250 // i n kg
AQb =300 // i n Kg
SQc1 =300 // i n kg
AQc =350 // i n Kg
APc =6.43 // i n r u p e e s p e r Kg
Loss =250; // i n Kg
StandardYield =( SQa1 + SQb1 + SQc1 ) - Loss ; // i n kg
SQa =( SQa1 * ActualYield ) / StandardYield ; // i n kg
SQb =( SQb1 * ActualYield ) / StandardYield ; // i n kg
SQc =( SQc1 * ActualYield ) / StandardYield ; // i n kg
// ( 1 )
MCVa =( SQa1 * SPa ) -( AQa * APa ) ; // i n r u p e e s
MCVb =( SQb1 * SPb ) -( AQb * APb ) ; // i n r u p e e s
MCVc =( SQc1 * SPc ) -( AQc * APc ) ; // i n r u p e e s
// ( 2 )
MPVc = AQc *( SPc - APc ) ; // i n r u p e e s
// ( 3 )
MUVa = SPa *( SQa1 - AQa ) ; // i n r u p e e s
MUVb = SPb *( SQb1 - AQb ) ; // i n r u p e e s
MUVc = SPc *( SQc1 - AQc ) ; // i n r u p e e s
// ( 4 )
RSQa =( SQa1 *900) /(750) ;
RSQb =( SQb1 *900) /(750) ;
RSQc =( SQc1 *900) /(750) ;
MMVc = SPc *( RSQc - AQc ) ;
// ( 5 )
TotalSC = SQa1 * SPa + SQb1 * SPb + SQc1 * SPc ; // i n Rs
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TotalSQ = SQa1 + SQb1 + SQc1 -(( SQa1 + SQb1 + SQc1 ) * Loss ) /100;
// i n Kg
SCperunit = TotalSC / StandardYield ; // i n Rs
RSY =( StandardYield *(900) ) /(750) ;
MYV = SCperunit *( ActualYield - RSY ) ;
disp ( MCVa , MCVa= ) ;
disp ( MCVb , MCVb= ) ;
disp ( MCVc , MCVc= ) ;
disp ( MCVa + MCVb + MCVc , T o t a l MCV= ) ;
disp ( MPVa , MPVa= ) ;
disp ( MPVb , MPVb= ) ;
disp ( MPVc , MPVc= ) ;
disp ( MPVa + MPVb + MPVc , T o t a l MPV= ) ;
disp ( MUVa , MUVa= ) ;
disp ( MUVb , MUVb= ) ;
disp ( MUVc , MUVc= ) ;
disp ( MUVa + MUVb + MUVc , T o t a l MUV= ) ;
disp ( MMVa , MMVa= ) ;
disp ( MMVb , MMVb= ) ;
disp ( MMVc , MMVc= ) ;
disp ( MMVa + MMVb + MMVc , T o t a l MMV= ) ;
// m a t e r i a l Y i e l d v a r i a n c e
disp ( m a t e r i a l Y i e l d v a r i a n c e s : )
disp ( MYV , MYV= ) ;
disp ( Note : )
)
;
)
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// Exa 11
clc ;
clear ;
close ;
SQa1 =240 // i n Kgs
AQa =280 // i n Kgs
SQb1 =160 // i n kg
AQb =120 // i n Kg
Loss =10; // i n %
StandardYield =( SQa1 + SQb1 ) -(( SQa1 + SQb1 ) * Loss ) /100; //
i n kg
SQa =( SQa1 * ActualYield ) / StandardYield ; // i n kg
SQb =( SQb1 * ActualYield ) / StandardYield ; // i n kg
// ( 1 )
// ( 2 )
// ( 4 )
RSQa =( SQa1 *400) /(400) ;
RSQb =( SQb1 *400) /(400) ;
// ( 5 )
109
32 TotalSC = SQa1 * SPa + SQb1 * SPb ; // i n Rs

33 TotalSQ = SQa1 + SQb1 -(( SQa1 + SQb1 ) * Loss ) /100; // i n Kg
34 SCperunit = TotalSC / StandardYield ; // i n Rs
35 RSY =( StandardYield *(400) ) /(400) ;
36 MYV = SCperunit *( ActualYield - RSY ) ;
37 // m a t e r i a l P r i c e v a r i a n c e
38 disp ( m a t e r i a l P r i c e v a r i a n c e s : )
39 disp ( MPVa , MPVa= ) ;
40 disp ( MPVb , MPVb= ) ;
41 disp ( MPVa + MPVb , T o t a l MPV= ) ;
42 // m a t e r i a l Mix v a r i a n c e
43 disp ( m a t e r i a l mix v a r i a n c e s : )
44 disp ( MMVa , MMVa= ) ;
45 disp ( MMVb , MMVb= ) ;
46 disp ( MMVa + MMVb , T o t a l MMV= ) ;
47 // m a t e r i a l Y i e l d v a r i a n c e
48 disp ( m a t e r i a l Y i e l d v a r i a n c e s : )
49 disp ( MYV , MYV= ) ;
50 // m a t e r i a l C o s t v a r i a n c e
51 disp ( m a t e r i a l C o s t v a r i a n c e s : )
52 disp ( MCVa , MCVa= ) ;
53 disp ( MCVb , MCVb= ) ;
54 disp ( MCVa + MCVb , T o t a l MCV= ) ;
55 disp ( Note :
)
56 disp ( N e g a t i v e v a r i a n c e s i n d i c a t e a d v e r s e v a l u e
;
)
Scilab code Exa 9.12 Calculate labour variances

1 // Exa 12
2 clc ;
3 clear ;
4 close ;
110
ST =10; // i n h o u r s
AT =8; // i n h o u r s
SR =9; // i n Rs / Hour
AR =10; // i n Rs / Hour
// Labour C o s t v a r i a n c e
LCV =( ST * SR ) -( AT * AR )
// Labour E f f i c i e n c y v a r i a n c e
LEV = SR *( ST - AT ) ; // i n Rs
// Labour Rate v a r i a n c e
LRV = AT *( SR - AR ) ; // i n Rs
disp ( LCV , Labour C o s t v a r i a n c e : )
disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
disp ( LRV , Labour Rate v a r i a n c e : )
)
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// Exa 13
clc ;
clear ;
close ;
ST =4300; // i n h o u r s
AT =4000; // i n h o u r s
GWP =16400; // i n RS
AR = GWP / AT ; // i n Rs / Hour
LCV =( ST * SR ) -( AT * AR )
LEV = SR *( ST - AT ) ; // i n Rs
111
15 // Labour Rate v a r i a n c e
16 LRV = AT *( SR - AR ) ; // i n Rs
17 disp ( LCV , Labour C o s t v a r i a n c e : )
18 disp ( LRV , Labour Rate v a r i a n c e : )
19 disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
21
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);
Scilab code Exa 9.14 Calculate idle time variances

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// Exa 14
clc ;
clear ;
close ;
ST =3200; // i n h o u r s
AT =3000; // i n h o u r s
SR =1.5; // i n Rs / Hour
IT =100; // i n Rs / Hour
AWP =6000; // i n RS
AR = AWP / AT ; // i n Rs / Hour
LCV =( ST * SR ) -( AT * AR )
AT1 = AT - IT ; // i d l e t i m e i s d e d u c t e d t o c a l c u l a t e r e a l
efficiency
LEV = SR *( ST - AT1 ) ; // i n Rs
LRV = AT *( SR - AR ) ; // i n Rs
// Labour I d l e Time v a r i a n c e
ITV = IT * SR ; // i n Rs
112

disp ( ITV , Labour I d l e Time v a r i a n c e : )
)
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Scilab code Exa 9.15 Calculate idle time variances

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// Exa 15
clc ;
clear ;
close ;
P =1000; // i n u n i t s
T =10; // h o u r s / u n i t
ST = P * T ; // i n h o u r s
AT =10800; // i n h o u r s
AR =5.20; // i n Rs / Hour
IT =400; // i n Rs / Hour
LCV =( ST * SR ) -( AT * AR )
AT1 = AT - IT ; // i d l e t i m e i s d e d u c t e d t o c a l c u l a t e r e a l
efficiency
LEV = SR *( ST - AT1 ) ; // i n Rs
LRV = AT *( SR - AR ) ; // i n Rs
// Labour I d l e Time v a r i a n c e
ITV = IT * SR ; // i n Rs
disp ( ITV , Labour I d l e Time v a r i a n c e : )
113
)
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// Exa 16
clc ;
clear ;
close ;
STa =20; // i n h o u r s
STb =25; // i n h o u r s
ATa =30; // i n h o u r s
ATb =15; // i n h o u r s
SRa =3; // i n Rs / Hour
SRb =4; // i n Rs / Hour
ARa =3; // i n Rs / Hour
ARb =4.5; // i n Rs / Hour
LCVa =( STa * SRa ) -( ATa * ARa )
LCVb =( STb * SRb ) -( ATb * ARb )
LEVa = SRa *( STa - ATa ) ; // i n Rs
LEVb = SRb *( STb - ATb ) ; // i n Rs
LRVa = ATa *( SRa - ARa ) ; // i n Rs
LRVb = ATb *( SRb - ARb ) ; // i n Rs
// Labour Mix v a r i a n c e
TAMT = ATa + ATb ; // t o t a l o f a c t u a l mix t i m e
TSMT = STa + STb ; // t o t a l o f s t a n d a r d mix t i m e
RSTa =( STa * TAMT ) / TSMT
RSTb =( STb * TAMT ) / TSMT
LMVa = SRa *( RSTa - ATa ) ; // i n Rs
114
LMVb = SRb *( RSTb - ATb ) ; // i n Rs

disp ( Labour C o s t v a r i a n c e : )
disp ( LCVa , Labour C o s t v a r i a n c e LCVa : )
disp ( LCVb , Labour C o s t v a r i a n c e LCVb : )
disp ( LCVa + LCVb , Labour C o s t v a r i a n c e : )
disp ( Labour E f f i c i e n c y v a r i a n c e : )
disp ( LEVa , Labour E f f i c i e n c y v a r i a n c e LEVa : )
disp ( LEVb , Labour E f f i c i e n c y v a r i a n c e LEVb : )
disp ( LEVa + LEVb , Labour E f f i c i e n c y v a r i a n c e : )
disp ( Labour Rate v a r i a n c e : )
disp ( LRVa , Labour Rate v a r i a n c e LRVa : )
disp ( LRVb , Labour Rate v a r i a n c e LRVb : )
disp ( LRVa + LRVb , Labour Rate v a r i a n c e : )
disp ( Labour Mix v a r i a n c e : )
disp ( LMVa , Labour Mix v a r i a n c e LMVa : )
disp ( LMVb , Labour Mix v a r i a n c e LMVb : )
disp ( LMVa + LMVb , Labour Mix v a r i a n c e : )
)
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// Exa 17
clc ;
clear ;
close ;
// g i v e n d a t a
STs =1600; // i n
STu =2400; // i n
ATs =2500; // i n
ATu =2500; // i n
SRs =0.50; // i n
SRu =0.60; // i n
:
hours
hours
hours
hours
Rs / Hour
Rs / Hour
115
12 ARs =0.40; // i n Rs / Hour

13 ARu =0.50; // i n Rs / Hour
14 // Labour C o s t v a r i a n c e
15 LCVs =( STs * SRs ) -( ATs * ARs )
16 LCVu =( STu * SRu ) -( ATu * ARu )
17 // Labour E f f i c i e n c y v a r i a n c e
18 LEVs = SRs *( STs - ATs ) ; // i n Rs
19 LEVu = SRu *( STu - ATu ) ; // i n Rs
21 LRVs = ATs *( SRs - ARs ) ; // i n Rs
22 LRVu = ATu *( SRu - ARu ) ; // i n Rs
23 // Labour Mix v a r i a n c e
24 TAMT = ATs + ATu ; // t o t a l o f a c t u a l mix t i m e
25 TSMT = STs + STu ; // t o t a l o f s t a n d a r d mix t i m e
26 RSTs =( STs * TAMT ) / TSMT
27 RSTu =( STu * TAMT ) / TSMT
28 LMVs = SRs *( RSTs - ATs ) ; // i n Rs
29 LMVu = SRu *( RSTu - ATu ) ; // i n Rs
30 // Labour Sub E f f i c i e n c y v a r i a n c e
31 LSEVs = SRs *( STs - RSTs ) ; // i n Rs
32 LSEVu = SRu *( STu - RSTu ) ; // i n Rs
33 disp ( Labour C o s t v a r i a n c e : )
34 disp ( LCVs , Labour C o s t v a r i a n c e LCVs : )
35 disp ( LCVu , Labour C o s t v a r i a n c e LCVu : )
36 disp ( LCVs + LCVu , Labour C o s t v a r i a n c e : )
37 disp ( Labour E f f i c i e n c y v a r i a n c e : )
38 disp ( LEVs , Labour E f f i c i e n c y v a r i a n c e LEVs : )
39 disp ( LEVu , Labour E f f i c i e n c y v a r i a n c e LEVu : )
40 disp ( LEVs + LEVu , Labour E f f i c i e n c y v a r i a n c e : )
41 disp ( Labour Rate v a r i a n c e : )
42 disp ( LRVs , Labour Rate v a r i a n c e LRVs : )
43 disp ( LRVu , Labour Rate v a r i a n c e LRVu : )
44 disp ( LRVs + LRVu , Labour Rate v a r i a n c e : )
45 disp ( Labour Mix v a r i a n c e : )
46 disp ( LMVs , Labour Mix v a r i a n c e LMVs : )
47 disp ( LMVu , Labour Mix v a r i a n c e LMVu : )
48 disp ( LMVs + LMVu , Labour Mix v a r i a n c e : )
49 disp ( Labour Sub E f f i c i e n c y v a r i a n c e : )
116
disp ( LSEVs , Labour Sub E f f i c i e n c y v a r i a n c e LMVs : )

disp ( LSEVu , Labour Sub E f f i c i e n c y v a r i a n c e LMVu : )
disp ( LSEVs + LSEVu , Labour Sub E f f i c i e n c y v a r i a n c e : )
)
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// Exa 18
clc ;
clear ;
close ;
// l e t s= s k i l l e d ; s s=s e m i s k i l l e d ; u= u n s k i l l e d
STs =3000; // i n w e e k s
STss =1200; // i n w e e k s
STu =1800; // i n w e e k s
ATs =2560; // i n w e e k s
ATss =1600; // i n w e e k s
ATu =2240; // i n w e e k s
SRs =60; // i n Rs / week
SRss =36; // i n Rs / week
SRu =24; // i n Rs / week
ARs =65; // i n Rs / week
ARss =40; // i n Rs / week
ARu =20; // i n Rs / week
LCVs =( STs * SRs ) -( ATs * ARs )
LCVss =( STss * SRss ) -( ATss * ARss )
LCVu =( STu * SRu ) -( ATu * ARu )
LEVs = SRs *( STs - ATs ) ; // i n Rs
LEVss = SRss *( STss - ATss ) ; // i n Rs
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LEVu = SRu *( STu - ATu ) ; // i n Rs

LRVs = ATs *( SRs - ARs ) ; // i n Rs
LRVss = ATss *( SRss - ARss ) ; // i n Rs
LRVu = ATu *( SRu - ARu ) ; // i n Rs
// Labour Mix v a r i a n c e
TAMT = ATs + ATu + ATss ; // t o t a l o f a c t u a l mix t i m e
TSMT = STs + STu + STss ; // t o t a l o f s t a n d a r d mix t i m e
RSTs =( STs * TAMT ) / TSMT
RSTss =( STss * TAMT ) / TSMT
RSTu =( STu * TAMT ) / TSMT
LMVs = SRs *( RSTs - ATs ) ; // i n Rs
LMVss = SRss *( RSTss - ATss ) ; // i n Rs
LMVu = SRu *( RSTu - ATu ) ; // i n Rs
// Labour Sub E f f i c i e n c y v a r i a n c e
LSEVs = SRs *( STs - RSTs ) ; // i n Rs
LSEVss = SRss *( STss - RSTss ) ; // i n Rs
LSEVu = SRu *( STu - RSTu ) ; // i n Rs
disp ( LCVs , Labour C o s t v a r i a n c e LCVs : )
disp ( LCVss , Labour C o s t v a r i a n c e LCVss : )
disp ( LCVu , Labour C o s t v a r i a n c e LCVu : )
disp ( LCVs + LCVss + LCVu , Labour C o s t v a r i a n c e : )
disp ( LEVs , Labour E f f i c i e n c y v a r i a n c e LEVs : )
disp ( LEVss , Labour E f f i c i e n c y v a r i a n c e LEVss : )
disp ( LEVu , Labour E f f i c i e n c y v a r i a n c e LEVu : )
disp ( LEVs + LEVss + LEVu , Labour E f f i c i e n c y v a r i a n c e : )
disp ( LRVs , Labour Rate v a r i a n c e LRVs : )
disp ( LRVss , Labour Rate v a r i a n c e LRVss : )
disp ( LRVu , Labour Rate v a r i a n c e LRVu : )
disp ( LRVs + LRVss + LRVu , Labour Rate v a r i a n c e : )
disp ( LMVs , Labour Mix v a r i a n c e LMVs : )
disp ( LMVss , Labour Mix v a r i a n c e LMVss : )
disp ( LMVu , Labour Mix v a r i a n c e LMVu : )
disp ( LMVs + LMVss + LMVu , Labour Mix v a r i a n c e : )
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disp ( Labour Sub E f f i c i e n c y v a r i a n c e : )

disp ( LSEVs , Labour Sub E f f i c i e n c y v a r i a n c e LMVs : )
disp ( LSEVss , Labour Sub E f f i c i e n c y v a r i a n c e LMVss :
)
disp ( LSEVu , Labour Sub E f f i c i e n c y v a r i a n c e LMVu : )
disp ( LSEVs + LSEVss + LSEVu , Labour Sub E f f i c i e n c y
v a r i a n c e : )
)
;
);

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// Exa 19
clc ;
clear ;
close ;
ST =60; // i n h o u r s
AT =40; // i n h o u r s
AR =200; // i n Rs / Hour
SCperunit =6; // i n Rs
StdTime =50; // i n h o u r s
StdYield =1000; // i n u n i t s
AY =1200; // i n u n i t s
LCV =( ST * SR ) -( AT * AR )
LEV = SR *( ST - AT ) ; // i n Rs
LRV = AT *( SR - AR ) ; // i n Rs
// Labour Y i e l d v a r i a n c e
SY =( StdYield * AT ) / StdTime ;
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22 LYV = SCperunit *( AY - SY ) ;
23 disp ( LCV , Labour C o s t v a r i a n c e : )
24 disp ( LEV , Labour E f f i c i e n c y v a r i a n c e : )
25 disp ( LRV , Labour Rate v a r i a n c e : )
26 disp ( LYV , Labour Y i e l d v a r i a n c e : )
28
;
);

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// Exa 21
clc ;
clear ;
close ;
// l e t m=men ; w=women ; b=b o y s
STm =960; // i n h o u r s
STw =480; // i n h o u r s
STb =320; // i n h o u r s
ATm =1600; // i n h o u r s
ATw =400; // i n h o u r s
ATb =200; // i n h o u r s
SRm =0.80; // i n Rs / h o u r
SRw =0.60; // i n Rs / h o u r
SRb =0.40; // i n Rs / h o u r
ARm =0.70; // i n Rs / h o u r
ARw =0.65; // i n Rs / h o u r
ARb =0.30; // i n Rs / h o u r
IT =220; // i n h o u r s
LCVm =( STm * SRm ) -( ATm * ARm )
LCVw =( STw * SRw ) -( ATw * ARw )
LCVb =( STb * SRb ) -( ATb * ARb )
120
24 // Labour E f f i c i e n c y v a r i a n c e
25 LEVm = SRm *( STm - ATm ) ; // i n Rs
26 LEVw = SRw *( STw - ATw ) ; // i n Rs
27 LEVb = SRb *( STb - ATb ) ; // i n Rs
29 LRVm = ATm *( SRm - ARm ) ; // i n Rs
30 LRVw = ATw *( SRw - ARw ) ; // i n Rs
31 LRVb = ATb *( SRb - ARb ) ; // i n Rs
32 // Labour Mix v a r i a n c e
33 TAMT = ATm + ATb + ATw - IT ; // t o t a l o f a c t u a l mix t i m e
34 TSMT = STm + STb + STw ; // t o t a l o f s t a n d a r d mix t i m e
35 RSTm =( STm * TAMT ) / TSMT
36 RSTw =( STw * TAMT ) / TSMT
37 RSTb =( STb * TAMT ) / TSMT
38 LMVm = SRm *( RSTm - ATm ) ; // i n Rs
39 LMVw = SRw *( RSTw - ATw ) ; // i n Rs
40 LMVb = SRb *( RSTb - ATb ) ; // i n Rs
41 // Labour I d l e t i m e v a r i a n c e
42 ITV = IT *(( STm * SRm + STw * SRw + STb * SRb ) /( STm + STw + STb ) ) ; //
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i n Rs
disp ( LCVm , Labour C o s t v a r i a n c e LCVm: )
disp ( LCVw , Labour C o s t v a r i a n c e LCVw : )
disp ( LCVb , Labour C o s t v a r i a n c e LCVb : )
disp ( LCVm + LCVw + LCVb , Labour C o s t v a r i a n c e : )
disp ( LRVm , Labour Rate v a r i a n c e LRVm: )
disp ( LRVw , Labour Rate v a r i a n c e LRVw : )
disp ( LRVb , Labour Rate v a r i a n c e LRVb : )
disp ( LRVm + LRVw + LRVb , Labour Rate v a r i a n c e : )
disp ( LEVm , Labour E f f i c i e n c y v a r i a n c e LEVm : )
disp ( LEVw , Labour E f f i c i e n c y v a r i a n c e LEVw : )
disp ( LEVb , Labour E f f i c i e n c y v a r i a n c e LEVb : )
disp ( LEVm + LEVw + LEVb , Labour E f f i c i e n c y v a r i a n c e : )
disp ( LMVm , Labour Mix v a r i a n c e LMVm: )
disp ( LMVw , Labour Mix v a r i a n c e LMVw: )
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disp ( LMVb , Labour Mix v a r i a n c e LMVb : )

disp ( LMVm + LMVw + LMVb , Labour Mix v a r i a n c e : )
disp ( Labour I d l e t i m e v a r i a n c e : )
disp ( ITV , Labour I d l e t i m e v a r i a n c e : )
)
;
);
67 // Answer i n t h e book i s n o t c o r r e c t o f LMV
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// Exa22
clc ;
clear ;
close ;
SQ =58000 // i n s q . f t .
AQ =60000 // i n s q . f t .
SP =7 // i n r u p e e s p e r s q . f t .
AP =6.75 // i n r u p e e s p e r s q . f t .
ST =174000; // i n h o u r s
AT =185200; // i n h o u r s
SR =3.75; // i n Rs / Hour
AR =3.5; // i n Rs / Hour
// ( i ) MCV
MCV =( SQ * SP ) -( AQ * AP ) ; // i n r u p e e s
// ( i i ) MPV
MRV = AQ *( SP - AP ) ; // i n r u p e e s
// ( i i i ) MUV
MUV = SP *( SQ - AQ ) ; // i n r u p e e s
disp ( MRV , MRV= ) ;
disp ( Note : )
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)
;
)
LCV =( ST * SR ) -( AT * AR )
LEV = SR *( ST - AT ) ; // i n Rs
LRV = AT *( SR - AR ) ; // i n Rs
123

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Scilab Textbook Companion for

by a grant from the National Mission on Education through ICT,

1 Time Value of Money

2 Simple and compound interest

5 Analysis of public projects

8 Product Process and Operation Costing

List of Scilab Codes

Calculate compound interest . . . . . . . . . . . . . .

Find compound interest reckoned yearly . . . . . . . .

Computation of Equivalent and analysis of Cost sheet

Scilab code Exa 1.1 Calculate compound interest

Scilab code Exa 1.2 Calculate Doubling Time

Scilab code Exa 1.3.a calculate compound value on yearly basis

disp ( Note : The a n s i n t h e book i s wrong )

Scilab code Exa 1.3.b calculate compound value on quarterly basis

Scilab code Exa 1.4 calculate compounded Amount

12 // f o r m u l a Vn=Vo(1+ i /m) (mn )

Scilab code Exa 1.5 calculate compounded amount received by child

Scilab code Exa 1.6.1 Calculate Effective rate of interest compounding

Scilab code Exa 1.6.2 Calculate Effective rate of interest compounding

Scilab code Exa 1.6.3 Calculate Effective rate of interest compounding

Scilab code Exa 1.7 Find out rate of interest

Scilab code Exa 1.8 Calculate future value

Scilab code Exa 1.9 Calculate future value

Scilab code Exa 1.10 Find the compounded Amount

Scilab code Exa 1.11 Calculate present value

Scilab code Exa 1.13 Calculate borrowed sum

Scilab code Exa 1.15 Calculate ammount of each instalment

Scilab code Exa 1.16 Calculate annual payment

Scilab code Exa 1.17 Calculate size of instalment

Scilab code Exa 2.1 Calculate compound interest

Scilab code Exa 2.2 Find compound interest

Scilab code Exa 2.4 Find the time

Scilab code Exa 2.5.a Find compound interest reckoned quarterly

Scilab code Exa 2.5.c Find compound interest reckoned yearly

Scilab code Exa 2.6 Find compound interest

Scilab code Exa 2.7 Find the amount

Scilab code Exa 2.8 Find the time

Scilab code Exa 2.9 Find the principal amount

Scilab code Exa 2.10 Calculate simple interest

12 P =102/((1+ r /100) ^n -1) ;

Scilab code Exa 4.1 Calculate payback period

Scilab code Exa 4.2 Calculate payback period

Scilab code Exa 4.3 Calculate payback period

disp ( PayBackPeriod , Payback p e r i o d o f t h e

Scilab code Exa 4.4 Calculate payback period

inINV =100000; // i n i t i a l i n v e s t m e n t i n Rs . and e q u a l

Scilab code Exa 4.5 Find average investment

Scilab code Exa 4.6 Calculate accounting rate of return

Scilab code Exa 4.7 Calculate average rate of return

Scilab code Exa 4.8 Determine average rate of return

disp ( ARR , A v e r a g e Rate o f Return o f machine A i n % :

Scilab code Exa 4.9 Appraise profitability of proposed investment

Scilab code Exa 4.10 Calculate internal rate of return

Scilab code Exa 4.11 Calculate internal rate of return

Scilab code Exa 4.12 Discuss according to internal rate of return

Scilab code Exa 4.13.1 Calculate payback period

Scilab code Exa 4.13.2 Calculate average rate of return

33 AvgD = ICO /10;

Scilab code Exa 4.13.3 Calculate Net present value

Scilab code Exa 4.13.4 Calculate profitability index

Scilab code Exa 4.13.5 Calculate internal rate of return

Present value at higher rate of