Question 1

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.

Options :

A : The solution (from the graph0 is to produce 675 units of E and 470 units of R.

B : The solution (from the graph0 is to produce 495 units of E and 670 units of R.

C : The solution (from the graph0 is to produce 475 units of E and 770 units of R.

D : The solution (from the graph0 is to produce 375 units of E and 750 units of R.

E : The solution (from the graph0 is to produce 375 units of E and 870 units of R.

F : The solution (from the graph0 is to produce 495 units of E and 470 units of R.

Answer: D

Question 2

A company accountant is trying to determine the optimum production plan for the period using linear programming.
The accountant has correctly formulated the linear programming problem as follows:
Variables (products): x and y
Objective function: Maximise contribution, C = 10x + 15y
Material constraint: 4x + 6y 500 (kg)
Labour constraint: x + 2y 350 (hours)
Machine constraint: 10x + 4y 1,500 (hours)
x constraint: 50 x 200
y constraint: y 0
Which of the following statements is true?

Options :

A : The selling price of y is $15.

B : The maximum demand for product x is 50 units.

C : Product x requires twice as much labour time as Product y.

D : Product y requires 4 machine hours to manufacture.

Answer: D

Question 3

The standard production cost of making a product is as follows:

What is the fixed production overhead capacity variance?

Options :

A : $9,000F

B : $6,000F

C : $3,000F

D : $6,000A

Answer: B

Question 4

Explain how probability analysis could be used to assess the risk of the evaluated projects.

Select all the true statements.

Options :

A : The company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.

B : The net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.

C : The probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole

D : The NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated. If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

Answer: A,B,C

Question 5

Which THREE of the following statements about different costing systems are correct?

Options :

A : Contribution per unit is the selling price per unit minus the variable costs per unit.

B : In a period during which finished goods inventory levels fall, profit using marginal costing will be higher than if absorption costing is used.

C : When valuing inventory using throughput costing, the direct labour cost is excluded.

D : Over-absorption of fixed production overhead is caused by actual sales exceeding budgeted sales.

E : Finished goods inventory will be assigned a higher value using throughput costing than absorption costing.

Answer: A,B,C

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