Question 2 a) Kay Fashion Limited (KFL), produces four different types of Jean: - Papa; Mama; Bob and Bae Jeans. The table below contained the cost cards of the four-different type of Jean. Sales prices, costs and resource requirements for each of the Jean are shown below: Papa Mama Bob Bae $ $ $ $ Per unit sales/costs Selling price Materials cost Direct labour cost 1.80 0.50 0.40 0.80 0.20 0.20 1.40 0.60 0.40 2.60 0.40 1.00 (Time required) Minutes Minutes Minutes Minutes Machine time per 5 2 3 6 unit Labour time per unit 2 1 2 5 Units Units Units Units Weekly sales 5,000 4,500 6,500 3,500 demand Labour time is a bottleneck resource and the maximum capacity operates at 640 labour hours each week. Operating costs, including direct labour costs are 15,440 each week. Direct labour costs are 12 per hour, and direct labour workers are paid for a 38-hour week, with no overtime. Required: I. Determine the quantities of each Jean that should be made and sold each week to maximise profit and calculate the weekly profit. (16marks) Calculate the throughput accounting ratio at this profit maximising level of output and sales. (4 marks) III. Interpret the result of the ratio in (ii) above. (2 marks) State two limitations of the throughput accounting ratio in practice. (3 marks) Total marks (25 marks) IV. Question 2 a) Kay Fashion Limited (KFL), produces four different types of Jean: - Papa; Mama; Bob and Bae Jeans. The table below contained the cost cards of the four-different type of Jean. Sales prices, costs and resource requirements for each of the Jean are shown below: Papa Mama Bob Bae $ $ $ $ Per unit sales/costs Selling price Materials cost Direct labour cost 1.80 0.50 0.40 0.80 0.20 0.20 1.40 0.60 0.40 2.60 0.40 1.00 (Time required) Minutes Minutes Minutes Minutes Machine time per 5 2 3 6 unit Labour time per unit 2 1 2 5 Units Units Units Units Weekly sales 5,000 4,500 6,500 3,500 demand Labour time is a bottleneck resource and the maximum capacity operates at 640 labour hours each week. Operating costs, including direct labour costs are 15,440 each week. Direct labour costs are 12 per hour, and direct labour workers are paid for a 38-hour week, with no overtime. Required: I. Determine the quantities of each Jean that should be made and sold each week to maximise profit and calculate the weekly profit. (16marks) Calculate the throughput accounting ratio at this profit maximising level of output and sales. (4 marks) III. Interpret the result of the ratio in (ii) above. (2 marks) State two limitations of the throughput accounting ratio in practice. (3 marks) Total marks (25 marks) IV
