A company has the following production planned for the next four weeks. The figures reflect the full capacity level of operations. Planned output is equal to the maximum demand per product.
The direct labour force is threatening to go on strike for two weeks out of the coming four. This means that only 2,160 hours will be available for production, rather than the usual 4,320 hours.
If the strike goes ahead, which product or products should be produced if profits are to be maximised?
A jewellery company makes rings (R) and necklaces (N).
The resources available to the company have been analysed and two constraints have been identified:
Labour time 3R + 2N < 2,400 hours
Machine time 0.5R + 0.4N < 410 hours
The management accountant has used linear programming to determine that R = 500 and N = 400.
Which of the following is/are slack resources?
(1) Labour time available
(2) Machine time available
The following statements have been made about using external information:
(1) External information is usually more reliable than internal information.
(2) External information can be general and vague, and may not really help an organisation with decision making.
Which of the above statement is/are true?
Which of the following sources of information would be considered internal?
Which of the following statements is true of pricing?
Which of the following conditions would need to be true for a price skimming policy to be sensible?
The following are types of Key Performance Indicators:
(i) Return on Capital Employed
(ii) Gross profit percentage
(iii) Acid Test ratio
(iv) Gearing ratio
Which of the above KPIs would be used to assess the liquidity of a company?
Why would a company want to encourage the use of non-financial performance indicators?
UU Company has been asked to quote for a special contract. The following information about the material needed has been given:
Material X:
Book value Scrap value Replacement cost
$5.00 per kg $0.50 per kg $5.50 per kg
The contract requires 10 kgs of Material X. There are 250 kgs of this material in inventory which was purchased in error over two years ago. If Material X is modified, at a cost of $2 per kg, it could then be used as a substitute for material Y which is in regular use and currently costs $6 per kg.
What is the relevant cost of the materials for the special contract?
VV Company has been asked to quote for a special contract. The contract requires 100 hours of labour. However, the labourers, who are each paid $15 per hour, are working at full capacity.
There is a shortage of labour in the market. The labour required to undertake this special contract would have to be taken from another contract, Z, which currently utilises 500 hours of labour and generates $5,000 worth of contribution.
If the labour was taken from contract Z, then the whole of contract Z would have to be delayed, and such delay would invoke a penalty fee of $1,000.
What is the relevant cost of the labour for the special contract?