QUESTION TWO

1. Nectar company produces 3 products, X, Y and Z, details of which are shown below:

X Y Z

Selling price per unit (ZMW) 130 120 110

Direct material cost per unit (ZMW) 85 60 70

Maximum demand (units) 40,000 30,000 25,000

Time required on the bottleneck 3 5 4

resource (hours per unit)

There are 320,000 bottleneck hours available each month.

Required

Calculate the optimum product mix each month. (15 marks)

2. There are three reasons why implementing an environmental management accounting system makes sense- cost savings, improved environmental reporting and minimizing environmental risk.

Required

(a) Explain what environmental management accounting means. (4 marks)

(b) Explain how good environmental behavior may help an organization to achieve each of the following:

(i) Cost savings;

(ii) Improved environmental reporting;

(iii) Minimizing environmental risk. (6 marks)

(25 Marks)