QUESTION: 21

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:

$ 5,500
$ 3,000
$ 8,500
$ 11,500

Answer(s): A

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QUESTION: 22

DRAG DROP (Drag & Drop is not supported)

Place each activity against the correct category according to its classification in the cost hierarchy of activities.

See Explanation section for answer.

Answer(s): A

Explanation:

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QUESTION: 23

Changing to a just-in-time, from a traditional, manufacturing environment can affect cost accounting systems.

Which of the following statements is correct?

Larger volumes of inventory must be recorded
A greater number of individual supplier records must be maintained
More frequent, smaller deliveries from suppliers must be recorded
Less frequent, larger deliveries from suppliers must be recorded

Answer(s): C

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QUESTION: 24

RT produces two products from different quantities of the same resources using a just-in- time (JIT) production system. The selling price and resource requirements of each of the

products are shown below:

Market research shows that the maximum demand for products R and T during June 2010 is 500 units and 800 units respectively. This does not include an order that RT has agreed with a commercial customer for the supply of 250 units of R and 350 units of T at selling prices of $100 and $135 per unit respectively. Although the customer will accept part of the order, failure by RT to deliver the order in full by the end of June will cause RT to incur a $10,000 financial penalty. At a recent meeting of the purchasing and production managers to discuss the production plans of RT for June, the following resource restrictions for June were identified: Direct labour hours 7,500 hours

Material A 8,500 kgs

Material B 3,000 litres

Machine hours 7,500 hours

Assuming that RT completes the order with the commercial customer, prepare calculations to show, from a financial perspective, the optimum production plan for June 2010 and the contribution that would result from adopting this plan.

The contribution per unit for R and T will be...?

R = $47 per unit. T = $61 per unit
R = $51 per unit. T = $61 per unit
R = $47 per unit. T = $65 per unit
R = $45 per unit. T = $66 per unit

Answer(s): A

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QUESTION: 21

QUESTION: 22

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QUESTION: 23

QUESTION: 24

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