Assume a production process that typically moves the following number of products through its five processes:

Process 1	1 000 per day
Process 2	1 400 per day
Process 3	150 per day
Process 4	580 per day
Process 5	560 per day

Assuming there is room for improvement in all processes, in what order of processes would the firm apply the theory of constraints to remove the bottlenecks?

Select one:

a. 4,5,3,1,2

b. 3 first, and then any order

c. 3,5,4,1,2

d. Work must be carried out in order of the physical flow of activities, i.e. 1, 2, 3, 4, 5

For the period just ended, Trek Corporation's Trailer Division reported profit of $38 million before tax and invested capital of $400 million. Assuming an imputed interest rate of 10 per cent, which of the following choices correctly denotes Trailer's return on investment (ROI) and residual income?

Select one:

a. 12%, $9 million

b. 12% ($9 million)

c. 9.5%, $2 million

d. 9.5%, ($2 million)

Jerry Containers manufactures Containers for the packaging industry. The Aluminium sheets are produced in the Sheets Division. The sheets are then transferred to the Container Division where the Sheets are further processed, cut and Containers are prepared. Each sheet of Aluminium from the Sheets division will make one Container after further processing. The standard cost of the finished Container is detailed as follows:

	Sheets Division	Container Division
Direct Material	$5	$7
Direct Labour	$6	$4
Variable overhead	$7	$9*
Total Standard cost	$18	$20

* Not including the transfer price for the Aluminium sheet from Sheets division.

The Sheets Division can also sell Aluminium sheets in the market to other companies in the packaging industry. Assume there is spare capacity in the Sheets Division. The sale price for a Aluminium sheet is $26. The Container Division sells its finished Containers for $ 46. The transfer price has been negotiated at $25.

The Container Division has been approached by the management of a company with a special order for 1000 boxes at $35 each.

The incremental gain or (loss) for the container division would be:

Select one:

a. $10 per container

b. $15 per container

c. ($10) per container

d. ($15) per container

Selected sales and operating data in respect of two Divisions of Pioneer Engineering Company are given below:

	Division A	Division B
Sales	$ 14,000,000	$ 25,000,000
Total Assets	$ 5,075,000	$ 7,550,000
Current liabilities	$ 75,000	$ 550,000
Profit before tax	$ 450,000	$ 1,155,000
Minimum required rate of return	10%	15%
Tax rate	30%	35%

The Economic Value Added (EVA) for Division B is:

Select one:

a. $(299,250)

b. $299,250

c. $105.000

d. $(105,000)