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'Koka Manufacturing… (Class 12 Business Studies 2026, Q31)

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Business StudiesCBSE Class 12 · Board exam 2026, set 66/1/1 · 6 marks · Long answer

CBSE Class 12 Business Studies 2026: question 31

Set in the CBSE Class 12 board exam of 2026, paper 66/1/1, section D, question 31, for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q31 · 6 marks · Long answerCompetency-basedFinancial Management

'Koka Manufacturing Ltd.' is a large scale manufacturer in the electronics industry. In this industry assets are prone to obsolescence and their replacement becomes due faster with change in technology. The company is constantly under pressure to upgrade its machinery and equipment as it would help company to stay competitive, improve its product quality and reduce production costs. So instead of purchasing the machinery, company decides to lease the required machinery, giving it flexibility to upgrade equipment at the end of lease term. This helps company to maintain operational efficiency, technological competitiveness and financial flexibility.

Identify and explain four factors that would affect the fixed capital requirements of 'Koka Manufacturing Ltd.'.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 66/1/1.

Hints

Open one hint at a time and try again before the next.

Hint 1

Manufacturer, large-scale, obsolescence, leasing: four clues.

Hint 2

Leasing lowers fixed capital needs.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. Nature of business: A manufacturing concern like Koka needs heavy investment in plant and machinery, unlike a trading concern.

    1½ marks

  2. Scale of operations: As a large-scale manufacturer it needs bigger plant and more space, so more fixed capital.

    1½ marks

  3. Technology upgradation: In electronics, assets become obsolete quickly and need faster replacement, raising fixed capital needs.

    1½ marks

  4. Financing alternatives: Leasing machinery instead of buying it reduces the funds to be invested in fixed assets.

    1½ marks

Answer: Nature of business, scale of operations, technology upgradation and financing alternatives (leasing).

Where the marks are

  • Each factor: ½ identification + 1 explanation

Revise the chapter

Practise this chapterBoard-style questions from Financial Management, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 66/1/1: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.