Question 1

A manager is deciding which one of four services to provide next period.

The contribution earned by each service will depend on the weather conditions as follows.

Using the maximin criterion, which service will the manager provide?

Options :

A : Service P

B : Service Q

C : Service R

D : Service S

Answer: D

Question 2

Some of the movements in a time series follow a pattern over time.
Which type of movement does NOT follow a pattern over time?

Options :

A : Trend

B : Cyclical variation

C : Random variation

D : Seasonal variation

Answer: C

Question 3

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

Question 4

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 5

The labour requirement for a special contract is 250 skilled labour hours paid at $10 per hour and 750 semi-skilled labour hours paid at $8 per hour.
At present, skilled labour is fully utilised on other contracts which generate a $12 contribution per hour, after charging labour costs. Additional skilled labour is unavailable in the short term.
There is a surplus of 1,200 semi-skilled hours over the period of the contract but the firm has a policy of no redundancies.
The relevant cost of labour for the special contract is:

Options :

A : $ 5,500

B : $ 3,000

C : $ 8,500

D : $ 11,500

Answer: A

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