answer it on paper as soon as possible

Question 2

a. Linesan Ltd produces two products details for which are below.

Materials/Unit $ 50 Other costs incurred in production:

Marks 20

45

110

800 units

4,300 liters used, costing $23,650 4,200 hours worked for $24,150

NAX MARA Selling Price $ 200 175

Labor

Machine maintenance

Factory Rent

Electricity

$30,000 $23,000 $150,000 $67,000

The machine used in the assembly of both products is old and breaks down from time to time. For the

year it is available for a maximum of 2000 hours.

Required:

Explain what bottle neck resource is and calculate the cost per factory hour for the machine in the assembly department. (Marks 5)

b. Each unit of NAX requires 30 minutes of machine time in the assembly department and each unit of MARA requires 1 hour.

Required:

Calculate the throughput accounting ratio for each product and recommend which should be given production priority. (Marks 4)

c. Illustrate what would happen to the throughput accounting ratio for product MARA if the materials cost per unit were to decrease by 20%. (Marks 3)

d. Discuss the concept of throughput accounting and its underlying assumptions. (Marks 4)

e. Explain the concept of contribution per unit of limiting factor and how it differs from return per factory hour as computed in part (b) . (Marks

Marks 20 Question 2 a Linesan Lad produces two product details for which are below. MARA 200 175 50 45 NAX Selling Prices Materials/Units Other costs incurred in production: Labor $30,000 Machine maintenance $23,000 Factory Rent $150,000 Electricity $67,000 The machine used in the assembly of both products is old and breaks down from time to time. For the year it is available for a maximum of 2000 hours, Required: Explain what bottleneck resource is and calculate the cost per factory hour for the machine in the assembly department (Marks 5) b. Each unit of NAX requires 30 minutes of machine time in the assembly department and each unit of MARA requires 1 hour, Required: Calculate the throughput accounting ratio for each product and recommend which should be given production priority. (Marks 4) c. Illustrate what would happen to the throughput accounting ratio for product MARA if the materials cost per unit were to decrease by 20% (Marks 3) Discuss the concept of throughput accounting and its underlying assumptions. (Marks 4) c. Explain the concept of contribution per unit of limiting factor and how it differs from "retur per factory hour' as computed in part (b) (Marks 4)