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Question 1 (25 Marks) (a) Al Khoud Training Center (KTC) is an industrial training company operating in Muscat Knowledge Oasis. Following increased competition and customer expectations, KTC has been forced to revisit its operational strategy and its quality standards. The following budgeted data for 2022 are available: Number of Trainees 6,000 Operating Income OMR45,000 Budgeted Variable Cost per Trainee Budgeted Fixed Cost per Training Trainee's Support Service OMR26 Facilities 16,000 Training Materials OMR12 Salaries 5,000 Foods OMR22 Miscellaneous Products & Services OMR15 Based on the customer survey it conducted, KTC has learned that several improvements to its products and services are required. The improvements would provide the following impacts: Increase in the Number of Trainees Increase in the Total Variable Costs Increase in the Total Fixed Costs 70% 65% 50% (b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part named Khoud11 which cost information is given below. Development costs OMR41,000 Production Period 2 years Selling Price (Local) OMR 15.50 Markets Muscat & Dubai Ratio of Sales between Muscat & Dubai 1:2 Ratio of Sales to Production 1:1 Monthly Production Cycle 1 Setup costs per cycle OMR10,200 Parts produced per cycle 16,000 units Direct production costs per cycle OMR36,500 Indirect manufacturing costs per cycle OMR28,600 Delivery charges per cycle OMR15,500 Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the (10 marks) estimated life-cycle revenues for the full production period and the life-cycle operating income for the first year only Question 1 (25 Marks) (a) Al Khoud Training Center (KTC) is an industrial training company operating in Muscat Knowledge Oasis. Following increased competition and customer expectations, KTC has been forced to revisit its operational strategy and its quality standards. The following budgeted data for 2022 are available: Number of Trainees 6,000 Operating Income OMR45,000 Budgeted Variable Cost per Trainee Budgeted Fixed Cost per Training Trainee's Support Service OMR26 Facilities 16,000 Training Materials OMR12 Salaries 5,000 Foods OMR22 Miscellaneous Products & Services OMR15 Based on the customer survey it conducted, KTC has learned that several improvements to its products and services are required. The improvements would provide the following impacts: Increase in the Number of Trainees Increase in the Total Variable Costs Increase in the Total Fixed Costs 70% 65% 50% (b) Al Khoud Company is producing Motorcycle parts and is currently in the process of evaluating a specific part named Khoud11 which cost information is given below. Development costs OMR41,000 Production Period 2 years Selling Price (Local) OMR 15.50 Markets Muscat & Dubai Ratio of Sales between Muscat & Dubai 1:2 Ratio of Sales to Production 1:1 Monthly Production Cycle 1 Setup costs per cycle OMR10,200 Parts produced per cycle 16,000 units Direct production costs per cycle OMR36,500 Indirect manufacturing costs per cycle OMR28,600 Delivery charges per cycle OMR15,500 Assuming that the selling price for Khoud-11 in Muscat is 50% of that in Dubai, calculate both, the (10 marks) estimated life-cycle revenues for the full production period and the life-cycle operating income for the first year only
