Question 16

Itemized Accounting Services prepares tax returns for clients. The firm employs six bookkeepers who cost the firm $10,000 in total each week. Each bookkeeper is expected to charge 30 hours per week to client jobs. At the end of the week the total hours charged by the six bookkeepers to client jobs is 150. The cost of spare capacity is closest to:

Question 16 options:

a)

$30

b)

$150

c)

$1668

d)

$5555

Question 17

Four products are manufactured in a labor-intensive process by XYZ:

Alpha

Beta

Gamma

Delta

Selling price per unit

100

150

90

200

Variable costs per unit

45

85

30

110

Labor hours

2

4

3

4

Assuming an overall capacity constraint, what is the ranking order of products for XYZ to produce to maximize its profitability:

Question 17 options:

a)

Beta, Gamma, Alpha, Delta

b)

Delta, Beta, Gamma, Alpha

c)

Gamma, Alpha, Delta, Beta

d)

Alpha, Delta, Gamma, Beta

Question 18

Use the following information to answer Questions 18 and 19:

Four products are manufactured by MNO:

Maxi

Midi

Mini

Micro

Selling price per unit

600

400

300

250

Variable labor costs per unit ($40/hour)

250

120

140

90

Variable material costs per unit

275

250

100

110

Each of the four products takes two production hours. Assuming production hours as the overall capacity constraint, the ranking order of products for MNO to maximize its profitability is:

Question 18 options:

a)

Maxi, Midi, Mini, Micro

b)

Micro, Midi, Maxi, Mini

c)

Micro, Mini, Maxi, Midi

d)

Maxi, Mini, Micro, Midi

Question 19

Applying the theory of constraints and a throughput accounting approach, and assuming labor to be the bottleneck constraint, the ranking order of products for MNO to maximize its profitability within the labor constraint is:

Question 19 options:

a)

Maxi, Mini, Micro, Midi

b)

Micro, Midi, Maxi, Mini

c)

Maxi, Midi, Mini, Micro

d)

Micro, Mini, Maxi, Midi