QUESTION: 85

CORRECT TEXT
A large manufacturing company sells a range of products. Details of one of these products are as follows.

Each completed batch is delivered immediately in full to the one customer that purchases
this product. The delivery vehicle is currently only 50% full when it makes these deliveries.
The customer will accept deliveries of any size.

Managers are considering changing the production batch size to 150 units.

Increased material storage would be needed; this can be rented nearby at a cost of $1,500 per month.

The additional storage facility would enable an increase in the reorder quantity for the materials. As a result a 5% discount would be received on all materials purchased.

Using direct product profitability (DPP), what will be the monthly profit attributable to the product if the production batch size is changed to 150 units?

Give your answer to the nearest whole $.

$23780

Answer(s): A

Reveal Solution Next Question

QUESTION: 86

For a pharmaceutical manufacturer, in which perspective of the Balanced Scorecard should the performance measure 'number of patents granted during the year' be included?

Customer
Internal business processes
Innovation and learning
Financial

Answer(s): C

Reveal Solution Next Question

QUESTION: 87

An organization's transfer pricing system involves:

· The transferring division receiving $20 per unit; an amount equal to its variable costs.
· The receiving division paying an additional $30,000 every month to the transferring division.

Which transfer pricing system is the organization using?

Dual transfer prices
Two part tariff
Cost-plus
Variable cost plus opportunity cost

Answer(s): B

Reveal Solution Next Question

QUESTION: 88

A manager must decide which one of three projects should be implemented. For each project the possible outcomes and their associated probabilities can be estimated reliably. The manager has decided to make the decision based solely on which project has the highest expected value of profit.

Which of the following statements are correct?

Select ALL that apply.

The manager will select the project with the lowest standard deviation.
The range of possible outcomes for each project is not important to the manager.
The decision is characterized by uncertainty and the manager is risk seeking.
The manager will select the project with the highest of all of the possible outcomes.
The decision is characterized by risk and the manager is risk neutral.

Answer(s): B,E

Reveal Solution Next Question

Free P2 Exam Braindumps (page: 22)

QUESTION: 85

QUESTION: 86

QUESTION: 87

QUESTION: 88