Mgt402 Fall 2011 Final Term Feb 2012 – VU Current Paper – 06 Feb 2012

Define Capacity and Volume budgeted 3 marks

Numerical Question 5 marks
Efficiency Ratio?

Production

Q. 69 Classify the following expenses as Financial or Administrative expense by filling the appropriate boxes

Expenses Nature of Expense
Salaries of employee Admin
Interest paid on debts Financial
Utility Bills Admin
Depreciation of office equipment Admin
Interest paid on debentures Financial

 

1. Bazar Company is a small family business that produces wooden plaques and trophies:

Plaques
Trophies
Selling price per unit
$18
$15
Variable cost per unit
12
8
Contribution margin per unit
$ 6
$ 7
Contribution margin ratio
33%
47%
In producing the items, the primary “bottleneck” is due to the fact the company only has one machine, a sander, to sand the wood that is used for the plaques or the trophies. Generally, the wood required for each plaque takes 0.25 hour to sand, while the word required for each trophy takes 0.50 hour to sand. Based on the constraint related to the machine time, which product should be emphasized if only limited machine time is available?

 

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