2. Cost and management accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 903 questions
For Examiner's Use Cariokae Ltd is a specialist manufacturer of steel rods for use in the construction industry. The company has three different machines each of which is capable of producing the rods. When a company receives a new order it has to decide which of the three machines to use. Data regarding the machines is as follows: MACHINE A B C Set-up costs per order $200 $330 $600 Number of rods produced per machine-hour Number of machine operators Variable factory overhead for each machine is $12 per direct labour hour. Direct material needed to produce 100 rods is $300, whichever machine is selected. Machine operators are paid $10.50 per hour. REQUIRED Order P235 has been received for 3000 rods. Calculate the costs of producing order P235 on each machine. MACHINE DATA FOR ORDER P235 A B C Order quantity Production rates per hour Operating hours Number of operators Direct labour hours worked COSTS FOR P235 $ $ $ Direct materials Direct labour Variable overheads Set up costs Total costs For Examiner's Use Advise the production manager which machine to use for order P235 to minimise costs. It has been suggested that by adding one additional operator to each machine, 1 there would be an efficiency saving of 10% on direct materials and 2 the rate of production would increase by 20%. REQUIRED Assuming that the additional operator is employed on each machine, re-calculate your answer for order P235. Data for order P235 MACHINE A B C For Examiner's Use State how your advice to the production manager should differ if the additional operator is employed. State whether the additional operator should be retained for each machine. Explain your reasoning.
9706_w09_qp_22
THEORY
2009
Paper 2, Variant 2
View
Questions Discovered
903