THS produces two products from different combinations of the same resources. Details of the products are shown below:

Identify, using graphical linear programming, the optimal production plan for products E and R to maximize THS’s profit in the month.

200 units each of components F, G and H are required next period.

All three components are made by skilled labour of which only 4,000 hours are available.

An external supplier is able to supply any requirements of the components.

No inventories are held.

Data for the three components are as follows:

In order to minimise cost, how many units of component H should be purchased from the external supplier?

A company is choosing between three projects, Project L, Project M and Project N using minimax regret. The outcome from each project is dependent on competitor reaction. If this is passive returns will be L $4,000, M $3,500 and N $5,200. If it is aggressive returns will be L $3,200, M $2,800 and N $2,950. Place the tokens into the table to show the maximum regret for each project and whether the project would be undertaken using minimax regret.

A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

y = a + bx where

y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1

Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:

Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units

Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

A company produces three products D, E and F. The statement below shows the selling price and product costs per unit for each product, based on a traditional absorption costing system.

Each of the products is produced using Process A which has a maximum capacity of 2,500 hours per period.

If a traditional contribution approach is used, the ranking of products, in order of priority, for the profit maximizing product mix will be:

Select the benefits to a company of using sensitivity analysis in investment appraisal.

(Select all the true statements.)

A company has identified the trend in its sales figures through the regression equation Y = 65.9 + 3.86X, where Y is the sales revenue in thousands of dollars and X is the month number. The average seasonal variation for October is 87%

Calculate the forecast sales revenue for October of Year 6.

Give your answer to the nearest $000.

A company develops computer software programs to meet each client's specific requirements. The management accountant is considering introducing a standard costing system.

Which THREE of the following are reasons that support the case for the company's introduction of a standard costing system?

Which of the following managers is most likely to be responsible for an favourable labour efficiency variance?

The fixed production overhead volume variance is:

A manufacturing company has more units of finished goods inventory at the end of a period than at the beginning of the period.

Which of the following statements is true?

Petco's material price standard was £8 per kg.

When looking over their accounts you calculate that in fact they they purchased 2,000kg at £6 per kg due to an overly abundant harvest that lowered global pet food prices.

You have been asked by your manager to analyse these figures and come to a conclusion.

With that in mind which of the following statements are correct? Select ALL that apply.

Information about a company's only two products is as follows:

The revenue from the products must be in the constant mix of 2U:3V. Budgeted monthly sales revenue is $110,000.

Fixed costs are $23,095 each month.

To the nearest $10, what is the budgeted monthly margin of safety in terms of sales revenue?

A company's product has the following standard selling price, variable costs and contribution:

Budgeted sales and production was 20,000 units and actual was 19,500 units.

Due to a market downturn the production and sales budget should have been 10% lower.

What is the operational sales volume contribution variance?

A company’s budget for the next period shows that it would breakeven at sales revenue of $800,000 and fixed costs of $320,000.

The sales revenue needed to achieve a profit of $200,000 in the next period would be:

A company reports planning and operational variances to its managers. The following data are available concerning the price of direct material M in the last period. Material M is the only material used by the company. The company operates a just-in-time (JIT) purchasing system.

Which TWO of the following statements about last period are definitely correct based on this information?

The direct material price operational variance was adverse.

A manager has not yet used all oh his budget. He is worried that his budget maybe reduced next year if he is not seen to have needed all the funds. He decides to spend the remaining £1,580 on another team building

exercise as well as a catered lunch for his department.

This example falls under which behavioural aspect of budgetary control?

RS is a travel company providing daily tours of a major European capital city. The market is highly competitive and RS has commissioned some market research to help with the pricing decision for a new tour. The research identified the probability of three possible market conditions and the number of tickets that would be sold each day at three different price levels.

Demonstrate, using a decision tree and based on expected value, which ticket price RS should choose.

A company is considering whether to develop an overseas market for its products. The cost of developing the new market is estimated to be $250,000. There is a 70% probability that the development of the new market will succeed and a 30% probability that the development of the new market will fail and no further expenditure will be incurred.

If the market development is successful, the profit from the new market will depend on prevailing exchange rates. There is a 50% chance that exchange rates will be in line with expectations and a profit of $500,000 will be made. There is a 20% chance that exchange rates will be favorable and a profit of $630,000 will be made and a 30% chance that exchange rates will be adverse and a profit of $100,000 will be made.

The profit figures stated are before taking account of the development costs of $250,000.

Use a decision tree to decide whether the company should develop an overseas market for its products.

Select one correct answer.

A company manufactures a machine. The machine is made from two types of raw material and is assembled in a factory using skilled labour. The engine for the machine is purchased from an outside supplier.

The following costs relate to the manufacture of one machine:

What is the finished goods inventory valuation for one machine using throughput costing?

A company makes two products, product X with a contribution per unit of $10 and product Y with a contribution per unit of $4.

These products are sold in the mix 3:2 by volume and fixed costs are $38,000 per period.

The breakeven point for product Y, based on the expected sales mix is:

A medium-sized manufacturing company, which operates in the electronics industry, has employed a firm of consultants to carry out a review of the company’s planning and control systems. The company presently uses a traditional incremental budgeting system and the inventory management system is based on economic order quantities (EOQ) and reorder levels. The company’s normal production patterns have changed significantly over the previous few years as a result of increasing demand for customized products. This has resulted in shorter production runs and difficulties with production and resource planning. The consultants have recommended the implementation of activity based budgeting and a manufacturing resource planning system to improve planning and resource management.

What are the benefits for the company that could occur following the introduction of an activity based budgeting system?

Select ALL the correct answers.

XY manufactures a range of products and uses an activity based costing system.

Budgeted production of Product B is 7,500 units.

Overheads have been identified by activity and related to appropriate cost drivers.

Product B is produced in batches of 250 units. Machines have to be reset after every batch and quality inspections are carried out on every third batch.

What is the total overhead cost per unit of Product B?

Give your answer to two decimal places.

A company is bidding to win a special contract.

Which of the following is NOT a relevant cost to the company of undertaking the contract?

A company is launching a new product.

The company accountant has constructed a payoff table to show the estimated profit at different levels of production and demand.

How many units should the company produce if the minimax regret criterion is applied?

Which THREE of the following are never relevant costs for short-term decision making?

The budgetary control report of XYZ for the latest period is shown below. Variances in brackets are adverse.

What is the sales volume profit variance?

A bakery manager is deciding how many batches of birthday cakes to decorate each day.

Demand for the birthday cakes varies from 12 to 15 batches per day. Each batch decorated and sold earns a contribution of $40 but each batch unsold leads to loss of contribution of $15.

The payoff table below shows the total $ contribution from each of the possibilities:

Based on expected values, the number of batches of birthday cakes the bakery manager should decorate each day is:

QR uses an activity based budgeting (ABB) system to budget product costs. It manufactures two products, product Q and product R. The budget details for these two products for the forthcoming period are as follows:

The total budgeted cost of setting up the machines is $74,400.

Select TWO potential benefits of using an activity based budgeting system.

A manufacturing company has fixed production overhead costs, direct material costs and direct labour costs. The number of units of closing finished goods inventory is lower than the opening inventory.

Which of the following statements is true?

Which THREE of the following are functional budgets?

A company produces and sells two products, product A and product B.

What are the total fixed costs when the weighted average contribution per unit is $5 and the breakeven points for product A and product B are 10,000 units and 5,000 units respectively?

Give your answer as a whole number (in 000's).

FG Enterprises manufactures and sells three products. There are 4,400 kg of Material X available in the next period. Material X is used in the manufacture of all three products. The following data is available for the next period.

What is the optimal production plan for the next period in order to maximise profit?

PQR is preparing the production budget for one of its products, the DX1, for the forthcoming year.

The following information is available:

How many units of the DX1 will need to be produced in the forthcoming year?

A company operates a customer complaints department.

How will the cost of the customer complaints department be classified in a system focussed on quality related costs?

A healthcare company specializes in hip, knee and shoulder replacement operations, known as surgical procedures. As well as providing these surgical procedures the company offers pre operation and post operation in-patient care, in a fully equipped hospital, for those patients who will be undergoing the surgical procedures.

Surgeons are paid a fixed fee for each surgical procedure they perform and an additional amount for any follow-up consultations. Post procedure follow-up consultations are only undertaken if there are any complications in relation to the surgical procedure. There is no additional fee charged to patients for any follow up consultations. All other staff are paid annual salaries.

The company’s existing costing system uses a single overhead rate, based on revenue, to charge the costs of support activities to the procedures. Concern has been raised about the inaccuracy of procedure costs and the company’s accountant has initiated a project to implement an activity-based costing (ABC) system.

The project team has collected the following data on each of the procedures. 

Calculate the profit per procedure for each of the three procedures, using the current basis for charging the costs of support activities to procedures.

What was the profit for the knee procedure?