can you answer question one and two plz?

ACCT3012 Tutorial Questions NSW 2006 AUSTRALIA DISCIPLINE OF ACCOUNTING ACCT3012 - MANAGEMENT ACCOUNTING B - S12011 TUTORIAL QUESTIONS WEEK 11 Product Mix Decisions REQUIRED READING Blocher, Chen, Cokins and Lin (2006) Cost Management: A Strategic Emphasis (3ed) McGraw Hill. Chapter 3: Managing the Costs of Constrained Resources. Bushong, J.G and J.C. Talbott (1999) An Application of the theory of constraints. The CPA Journal, 67(1): pp. 53-55. Juras, P., Peacock, E. (2006) Applying Strategic Cost Analysis Concepts to Capacity Decisions, Management Accounting Quarterly, 8(1): pp. 24-35. Kershaw, R. (2000) Using TOC to \"Cure\" Healthcare Problems, Management Accounting Quarterly, 1(3): pp. 1-7. TUTORIAL QUESTIONS QUESTION ONE Precision Engineering Inc. (PEC) is a small manufacturer of precision tools used to construct research equipment for engineering departments at colleges and universities. It sells its two main products, PEC-1 and PEC-2, for $200 and $250, respectively. Due to increasing demand and shortage of specialised labour, PEC has found it increasingly difficult to meet the current weekly demand of 40 units of PEC-1 and 15 units of PEC-2. The following flow diagram shows the manufacturing requirements for the two products and the three types of materials required. Material A is used in PEC-1 only, Material C is used in PEC-2 only, and Material B is used in both PEC-1 and PEC-2. The amount of weekly labour available for the four manufacturing operations follows: Receiving and testing materials: 2,000 minutes Machining (for Material A only): 3,500 minutes Assembly: 2,000 minutes Finishing: 3,500 minutes 1 CYL/ManAccB-Tutorial Questions - Week 11v1.docx ACCT3012 Tutorial Questions Assume that the labour for each operation is specialised and cannot be moved from one activity to another, that all operations except receiving and testing require a high level of skill, and that PEC cannot increase the capacity on these operations in the short run. Required What is the best production plan for PEC? Why? QUESTION TWO Bakker Industries sells three products (611, 613, and 615) that manufactures in four departments. Both labour and machine time are applied to products in each of the four departments. The machine-processing and labour skills required in each department prohibit switching either machines or labour from one department to another. However, Bakker has a good supply of both full-time and part-time labour and does not expect hiring or retention of employees to be a problem. Because of the availability of part-time labour, Bakker considers labour a variable cost and includes it in the calculation of throughput margin. The company also included additional costs as variable (variable overhead and variable selling) when calculating throughput margin. Bakker's management is planning its production schedule for the next several months. Some machines will be out of service for extensive overhauling. Available machine times by department for each of the next six months are as follows: 2 CYL/ManAccB-Tutorial Questions - Week 11v1.docx ACCT3012 Tutorial Questions Department 1 Normal machine capacity in machine-hours Capacity of machines being repaired, in machine-hours Available capacity in machine-hours 3,500 500 3,000 2 3 4 3,500 3,000 3,500 400 3,100 300 2,700 200 3,300 Labour and machine specifications per unit of product follow: Product Labor and Machine Time 6 11 Direct labor-hours Machine-hours 2 2 613 Direct labor-hours Machine-hours 615 Direct labor-hours Machine-hours Department 2 1 3 4 3 1 3 2 1 2 1 1 2 1 0 0 2 2 2 2 2 2 1 1 1 1 The Sales Department's forecast of product demand over the next six months is as follows: P roduct 611 M onthly Sales 500 units 613 615 400 units 1,000 units Bakker's inventory levels will not increase or decrease during the next six months. The unit price and cost data valid for the next six months follow: P roduct 6 11 $196 613 $123 615 $167 7 13 17 D irect labor Department 1 Department 2 Department 3 Department 4 12 21 24 9 6 14 18 12 14 16 9 V ariable overhead 27 20 25 F ixed overhead 15 10 32 V ariable selling 3 2 4 P rice D irect materials REQUIRED: a) Determine whether Bakker can meet the monthly sales demand for the three products. What department is a constraint, if any? b) What monthly production schedule would he best for Bakker Industries? How might Bakker be able to overcome the production constraint? 3 CYL/ManAccB-Tutorial Questions - Week 11v1.docx