Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Exam kit 2023-2024 Q254 Q 4 Sweet treats Bakery
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- February 2, 2025 at 1:25 pm #715136
Hello tutor,
How are you,
4 On Friday, due to a local food festival at the weekend, Sweet Treats Bakew is considering increasing its production of cupcakes. These cupcakes can be sold at the festival at the existing selling price.
The company has unlimited capacity forweighing and mixing on Friday but its existing three ovens are already fully utilised. Therefore in order to supply cupcakes to the festival, Sweet Treats Bakery will need to hire another identical oven at a cost of $45 for the day.
How much will profit increase by if the company hires the new oven and produces as many cupcakes as possible?
A $55.00
B
$140.00
C
$95.00
D
$31.00Here the question is about the increase in the profit ,but the answer is actually the Throughput amount for the extra oven
(2-.25) * (80 more units) =140-the cost of hiring 45=95So do we have to assume that the question meant the throughput not the profit after considering fixed cost.
Thanks
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