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- March 14, 2017 at 10:17 pm #378254AnonymousInactive
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Ardennes limited makes and sells two products A and B, each of which passes through the same automated production operations. The following estimated information is available for period 1:
(i) Product unit data: A B
Selling price per unit (ZMW) 60 70
Direct material cost (ZMW) 2 40
Variable production overhead cost (ZMW) 28 4
Overall hours per product unit (hours) 0•25 0•15
(ii) Budgeted production/sales of products A and B are 120,000 units and 45,000 units respectively. The selling prices per unit for A and B are ZMW60 and ZMW70 respectively.
(iii) Maximum demand for each product is 20% above the budgeted sales levels.
(iv) Total fixed production overhead cost is ZMW1,470,000. This is absorbed by products A and B at an average rate per hour based on the estimated production levels.
One of the production operations has a maximum capacity of 3,075 hours that has been identified as a bottleneck that limits the overall production/sales of products A and B. The bottleneck hours required per product unit for products A and B are 0•02 and 0•015 respectively.
Required:
i. State Any two ways of exploiting a bottleneck. (2 marks)
ii. Calculate the mix (units) of products A and B that will maximise net profit and the value (ZMW) of the maximum net profit. (9 marks)
iii. Briefly explain how planning can improve performance measurement and management.
(4 marks)March 15, 2017 at 7:47 am #378298There is no point in just setting test questions here and expecting an answer!!
We are not here to do your homework for you ?If it is not homework then you must have an answer in the same book in which you found the question and should therefore ask about whatever part of the answer you are not clear about – then I will try and help.
(I assume of course that you have watched my free lectures on this. The lectures are a complete free course for Paper F5 and cover everything needed to be able to pass the exam well.)
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