decision making

1 A company wants to decide whether to make its materials in-house or whether to sub-contract production to an external supplier. In the past it has made four materials in-house, but demand in the next year will exceed in-house production capacity of 8,000 units. All four materials are made on the same machines and require the same machine time per unit: machine time is the limiting production factor. The following information is available.
Material W X Y Z
Units required 4,000 2,000 3,000 4,000
Variable cost of in-house manufacture $8 per unit $12 per unit $9 per unit $10 per unit Directly attributable fixed cost expenditure $5,000 $8,000 $6,000 $7,000
Cost of external purchase $9 per unit $18 per unit $12 per unit $12 per unit
Directly attributable fixed costs are fixed cash expenditures that would be saved if production of the material in-house is stopped entirely. If a decision is made solely on the basis of short-term cost considerations, what materials should the company purchase externally?
a
4,000 units of W and 1,000 units of Z
b
4,000 units of W and 4,000 units of Z
c
3,000 units of Y and 2,000 units of Z
d
1000 units of y and 4000 units of z

2
A linear programming model has been formulated for two products, X and Y. The objective function is depicted by the formula C = 5X + 6Y, where C = contribution, X = the number of product X to be produced and Y = the number of product Y to be produced. Each unit of X uses 2 kg of material Z and each unit of Y uses 3 kg of material Z. The standard cost of material Z is $2 per kg. The shadow price for material Z has been worked out and found to be $2.80 per kg. If an extra 20 kg of material Z becomes available at $2 per kg, what will the maximum increase in contribution be?
A Increase of $96
B Increase of $56
C Increase of $16
D No change

3
BA produces and sells two products . The W sells for $8 per unit and has a total variable cost of $3.00 per unit while the R sells for $14 per unit and has a total variable cost of $4.20. For every five units of W sold, six units of R are sold.BA’s fixed costs are $43890
per period
required:
calculate the margin of safety in term of sales revenue and also as a percentage of budgeted sales revenue

4
An organization makes and sells 3 products,F G and H.The products are sold in the proportions F:G:H.The organization’s fixed costs are $80000 per month and details of the products are as follows:
products selling price/unit($) VC per unit ($)
F 22 16
G 15 12
H 19 13
The organisation wishes to earn a profit of $52000 next month.Calculate the required sales value of each product to achieve the target profit