Several methods have been used from time to time There are 1 Historical cost

Several methods have been used from time to time

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Several methods have been used from time to time. There are 1. Historical cost method 2. Replacement costs method 3. (Market value' - method 4. 'Premium price' - method 5. Royalty relief method 6. Young and rubican brand asset valuator model 7. Economic use method 11.4 SELF ASSESSMENT QUESTIONS 163
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BRAND VALUATION 1. What is a ‘brand’? 2. Why should brands be evaluated? 3. Describe 3 methods of brand valuation. 4. Explain the 'brand asset valuator' model. 164
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BRAND VALUATION REFERENCE MATERIAL Click on the links below to view additional reference material for this chapter Summary PPT MCQ Video Lecture 165
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PROBLEMS FOR EXERCISE Chapter 12 PROBLEMS FOR EXERCISE We are now appending below some problems for your exercise: Sample solutions for similar types of problems are given. The others you may use for exercise. Problems for Exercise 1. Ronald Metal wares manufacture Stainless steel containers for Industrial use. Their works are situated at Nasik in Maharashtra. They have 4 types of containers, very large (VL), Large (L), Medium (M) and Small (S) The cost structures for the 4 types of containers are: Table no: 1 The plant has machines for manufacturing steel containers whose fixed cost is Rs. 1.5 lacs per month. Variable cost of plant running viz. electricity, fuel etc. is Rs. 3 per hour. Ronald Metal Ware sells its containers in Maharashtra and Gujarat. In Maharashtra the VAT is @12.5 percent and for Gujarat the sale attracts central sales tax @ 2 percent, after which VAT @ 12.5 percent gets imposed. Tax has to be reckoned on billing price so that billing price plus tax, amounts to the buying price to the purchasing dealer. VL L M S Materials Rs. per unit 2000 1800 1500 1000 Direct Labour Rs. per unit 600 500 400 350 Machine Hrs reqd per unit 10 9 7 1.33 166
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PROBLEMS FOR EXERCISE The average freight per unit is Table no: 2 Selling and Distribution Variable expenses are: Table no: 3 The sales per month and the buying price for the purchasing distributors per unit in the two regions are: Table no: 4 Work out the individual profitability of the 4 types of containers. Solution: First we shall calculate the cost of production of each of the varieties: Table no: 5 VL L M S For sale in Maharashtra 100 80 75 60 For sale in Gujarat 200 170 120 90 VL L M S At percentge rate of selling price 3 percent 4 percent 6 percent 8 percent VL L M S Maharashtra: units 1500 1800 3000 5000 buying price per unit Rs. 4800 Rs. 4500 Rs. 4000 Rs. 2700 Gujarat: units 1200 1500 3000 4500 buying price per unit Rs. 4500 Rs. 4200 Rs. 3800 Rs. 2500 VL L M S Materials Rs. per unit 2000 1800 1500 1000 Direct Labour Rs. per unit 600 500 400 350 167
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PROBLEMS FOR EXERCISE Now we shall calculate the realizations: For sales in Maharastra the buying price of the dealer is inclusive of vat @ 12.5 percent Similarly for sales in Gujarat the buying price of the dealer is inclusive of cst @ 1 percent Table no: 6 Machine Hrs reqd per unit 10 9 7 4 Electricity fuel @ Rs. 3 per hour 30 27 21 12 Total units manufactured for sales in Maharashtra and Gujarat 2700 3300 6000 9500 Total machine hours utilised 2700 x 10 = 27000 3300 x 9 = 29700 6000 x 7 = 42000 9500 x 4 = 38000 Thus total utilization of machine per month = 136700 hours. The total fixed cost being Rs. 150000 the apportionment to the 4 products will be: 29626 32590 46086 41697
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