QUESTION: 57

A company manufactures a single product. The company absorbs fixed production overhead using a pre-determined rate per unit.

The following data applies for month 7:

During month 7 fixed production overhead was over absorbed by $40,000.

What was the actual number of units produced during month 7?

16,000
14,000
8,000
6,000

Answer(s): A

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QUESTION: 58

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

Identify, using graphical linear programming, the weekly production schedule for products J and L that will maximize the profits of JRL during the next four weeks.

The solution from the graph is to produce 330 units of J and 280 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 283.333 units of L.)
The solution from the graph is to produce 310 units of J and 280 units of L. (A simplex solution shows the true optimum to be 308.333 units of J and 283.333 units of L.)
The solution from the graph is to produce 330 units of J and 290 units of L. (A simplex solution shows the true optimum to be 332.333 units of J and 293.333 units of L.)
The solution from the graph is to produce 315 units of J and 290 units of L. (A simplex solution shows the true optimum to be 316.333 units of J and 293.333 units of L.)
The solution from the graph is to produce 312 units of J and 295 units of L. (A simplex solution shows the true optimum to be 312.333 units of J and 294.999 units of L.)
The solution from the graph is to produce 317 units of J and 270 units of L. (A simplex solution shows the true optimum to be 316.666 units of J and 269.666 units of L.)

Answer(s): B

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QUESTION: 59

A snowboard manufacturer is considering investing in technology that will give a good indication of how heavy snowfall will be in the future. The predictions tend to be reasonably accurate.

The current budgeted profit for the year is £2,560,000 but if they invest in this technology and it works, the expected profit will be £2,640,000. The manufacturer is willing to invest a maximum of £40,000 into the venture.

What is the expected profit if the investment is NOT made?

£2,560,000
£2,640,000
£2,520,000
£2,600,000

Answer(s): D

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QUESTION: 60

XY, a not-for-profit charity organization which is funded by public donations, is concerned that it is not making the best use of its available funds. It has carried out a review of its budgeting system and is considering replacing the current system with a zero-based budgeting system.

Select ALL the potential advantages AND disadvantages for the charity of a zero-based budgeting system.

It avoids the complacency inherent in the traditional incremental approach where it is assumed that future activities will be very similar to current ones.
It discourages a questioning approach by focusing attention not only on the cost of the activity but on the benefits it provides. The charity managers will not articulate the benefits encouraging them to think clearly about the activities.
Preparation of the decision packages will normally require the environment of many employees. This environment may produce useful ideas and promote job satisfaction.
The creation of decision packages and their subsequent ranking by top management is very time consuming and costly. The charity will need to assess whether the benefits of the system outweigh the costs involved.
In an organization like a charity, the decision packages are not very disparate and difficult t compare.
In applying traditional budgeting, `activities' may result in functional departments rather than cross functional activities and thus distract attention from the real cost-reduction issues.

Answer(s): A,C,D

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