Question 1

Two products being produced by a company require the same material which is limited to 2,600 kgs.

What is the optimal production plan?

Options :

A : 500 units of S & 100 units of T

B : 50 units of S & 400 units of T

C : 400 units of S & 167 units of T

D : 500 units of S & 400 units of T

Answer: A

Question 2

Explain how probability analysis could be used to assess the risk of the evaluated projects.

Select all the true statements.

Options :

A : The company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.

B : The net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.

C : The probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole

D : The NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated. If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

Answer: A,B,C

Question 3

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 4

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 5

A company is preparing its annual budget and is estimating the number of units of Product A that it will sell in each quarter of year 2. Past experience has shown that the trend for sales of the product is represented by the following relationship:

y = a + bx where

y = number of sales units in the quarter a = 10,000 units b = 3,000 units x = the quarter number where 1 = quarter 1 of year 1

Actual sales of Product A in Year 1 were affected by seasonal variations and were as follows:

Quarter 1:14,000 units Quarter2: 18,000 units Quarter 3: 18,000 units Quarter 4: 20,000 units

Calculate the expected sales of Product A (in units) for each quarter of year 2, after adjusting for seasonal variations using the additive model.

Options :

A : The expected sales for year 2 Quarter 4 was 32700 units

B : The expected sales for year 2 Quarter 4 was 32000 units

C : The expected sales for year 2 Quarter 4 was 33000 units

D : The expected sales for year 2 Quarter 4 was 40000 units

Answer: B

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