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First Question:
A company makes two products X and Y for which the following details are given:
X Y
Selling Price $50 $32
Material $10 $6
Direct Labor $20 $15
Assembly Time 20 mins 15 mins
Maximum Demand 1500 units 1000 unitsTotal assembly time is limited to 600 hours.
Using throughput accounting, how many units of Y should be produced?
1000 units
2400 units
100 units
400 unitsI couldn’t work this out and the answer comes to 400 units. I acknowledge that there isn’t a requirement to use the TA ratio, but what is the correct approach to tackle this paper?
Second question:
A company is intending to produce a new product. They have made two ‘test’ units – the first unit took 8 hours to make and the second unit took 6 hours to make.What is the learning rate?
12.5%
87.5%
25%
75%I calculated this as 75%, as I did 6 hours/8 hours. I even tried to use the formula and I knew I couldn’t have as you need LR to calculate ‘b’ in Y=ax^b. Please advise on a suitable approach.
Third question:
The following information is available for a product:Target selling price $20 per unit
Target mark-up on cost 1/3
Estimated production cost $16 per unitWhat is the target cost gap for this product?
$1
$0
$4
$2I calculated it as $4, only realizing my mistake after finishing the test. I then worked it out to be $1, which is the correct answer. But the method I used was strange and I am not sure if it is the right way of approaching it. My method was:
20 – (16+(16 x (1/3)))
I would like to know if the above method is suitable to show in the exam.
Thanks a lot for any help I receive on these questions!
Avnish
Question 1:
The return per factory hour for X is (50 – 10) / (20/60) = $120
For Y, it is: (32 – 6) / (15/60) = $104So X is better and they should make as many X’s as possible, which is 1500.
This takes 1500 x 20/60 = 500 hours. So there are 100 hours left which they will use to make Y’s. Y takes 15/60 hours, so they can make 100 / (15/60) = 400 Y’sQuestion 2:
The average time per unit if they make 2 units is (8 + 6) / 2 = 7 hours.
So the learning rate is 7/8 = 87.5%Question 3:
Target cost = 20 x 3/4 = $15
Cost gap = 16 – 15 = $1
(your method is wrong I am afraid!)
Thanks John!!!
I was absolutely sure that the third one looked wrong when I looked at my method! And you did 3/4 instead of 1/3. If the markup was 1/3 why did the answer require that the method use 3/4?
The second one, what is the reason of bringing the final answer using the first set of units? Where you did 7/8, would it not work if you used the second set of units, since the learning rate would stay the same?
On the first one, my misunderstanding was that even though the question did not ask for the use of any ratio calculation, I thought there would be a different method.
Thanks again!! When will the MCQ objective test be added with new questions? I have tried to get a good a mark as possible and I achieved 75%. That is after 4 or 5 attempts. And the same questions are coming up again and again.
Avnish
1)
If the mark-up is 1/3 of cost, then for every $3 cost the markup will be $1 and the selling price will be $4. Or, putting it the other way round, for every $4 selling price, the cost will be $3.
2)
Every time production doubles, the average time per unit falls to a fixed percent of the previous average time per unit.
Average time when we make one is 8 hours
Average time when we make two is 7 hoursYou should not be getting the same questions each time – maybe clearing your cache will help. New questions are being added to the bank of questions regularly.
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