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a=
Regression analysis
y bx n n
b=
r=
y bx a= nxy-xy n n nx2 -(x)2 bx y a= nnxy-xy n b= nxy-xy 2 2 nx -(x) r= nxy-xy (nx2 -(x)2 )(ny 2 -(y)2 ) b= nx2 -(x)2 xxy-xy r= 2 2C0D (nx -(x)2 )(ny 2 -(y)2 ) = Economic order xxy-xy quantity Ch r= 2 (nx -(x)2 )(ny 2 -(y)2 ) 2C0D = 2C0D Ch = D 2C0D = Ch (1- ) C h R Economic batchD 2C0 quantity = D Ch D 2C(1- R ) 0 = D Ch (1- ) R b=
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PAPER F2
A & B are production departments. The repairs and maintenance service production department as follows: A 60% 40% B 40% 40% Repairs 20% Maintenance
Budgeted machine hours: A: 5,000hrs; B: 60,000 hrs (a) (b) Calculate an overhead absorption rate for each production dept. Smith Ltd has budgeted overheads of $200,000 and budgeted labour hours of 50,000. Actual hours worked were 48,000 and actual overheads were $205,000. Calculate the amount of over or under absorption of overheads
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PAPER F2
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PAPER F2
BREAKEVEN ANALYSIS
Skully Ltd has produced the following (summarised) P&L A/C for 2010: $ $ Sales (20 000 units) 560,000 Production costs: Variable 252,000 84,000 Fixed 336,000 Gross Profit 224,000 Non-production costs: Variable 84,000 84,000 Fixed 168,000 Net Profit $56,000 (a) (b) (c) (d) What is breakeven sales volume for 2010? What is the margin of safety in 2010? What is C/S ratio in 2010 Draw (i) profit volume chart (ii) breakeven chart for 2010
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PAPER F2
PROCESS COSTING
A In process X, 8,000 units were started during the month. There is a normal loss of 10% of input. All losses are sold for $1 p.u. Actual units completed during the month were 7300u. Costs incurred during the month: Materials: $20,000 Labour and overheads: $3,840 (There was no W.I.P at start or end of month) Write up the Process account and Loss account for the month B In process Y, 6,000u were started during the month. W.I.P. at the start of month: 400u [Materials 100% complete: $1,600 Labour 30% complete: $240] W.I.P. at the end of month: 600u [ Materials 100% complete Labour 60% complete] Expenditure during the month: Materials: $30,000 Labour: $18,120 (There were no losses during the month) Write up the process account, using FIFO
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PAPER F2
The costs incurred in the process are $460,000 Product A needs a further $3 per kg to be spent before it is ready for sale. For products A & B, calculate the stock value per kg splitting the joint costs (i) (ii) on the basis of weight on the basis of sales value
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PAPER F2
LINEAR PROGRAMMING
Mulder Ltd manufactures 2 products - X & Y with the following unit costings: X 20 14 $6 2 hrs 5 kg 3,000 u Y 15 5 $10 4 hrs 3 kg 12,000 u
Selling price Variable costs Contribution Labour usage Material usage Maximum demand:
If labour hours are restricted to a maximum of 8,000 hours, and material is restricted to a maximum of 13,000kg, what is the optimum production schedule?
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PAPER F2
LINEAR PROGRAMMING
CONSTRAINTS: Labour: 2x + 4y 8.000 Material: 5x + 3y 13.000 Demand: x 3000; y 12.000 Non-negativity: x 0; y 0 OBJECTIVE: Maximise contribution: C = 6x+10y
Demand For x
Material
2000 1500
Labour
Objective
2500 2600 [Contribution line: if C = $15.000, then: x=0; y=1500 y=0; x=2500 BUT use any value for C - slope will be the same]
D
4000 x
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PAPER F2
LINEAR PROGRAMMING
Optimum production schedule occurs at point E on the graph At point E: and (1) x 2.5 gives: (3) (2) gives 2x + 4y = 8,000 (1) 5x + 3y = 13,000 (2) 5x + 10y = 20,000 (3) 7y = 7000 y = 1000 2x + 4000 = 8000 2x = 4000 x = 2000
Optimum production schedule: Produce 2000 units of product X and 1000 units of product Y
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PAPER F2
STOCK CONTROL
X plc needs to purchase 1,800 units a year. The purchase price of each unit is $25. Delivery costs per order: Stock holding costs p.a. (as %age of purchase cost): (a) $32 18 % p.a.
Calculate the optimum order quantity, and the total costs p.a. at that order quantity.
(b)
Y Plc has minimum demand of 20 units per day, average demand of 30 units per day, and maximum demand of 40 units per day. The lead time varies between 10 and 15 days. (i) (ii) What should the reorder level be? If the reorder quantity is 1,200 units, what will be the maximum stock level?
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PAPER F2
REGRESSION
Units x 100 200 300 400 500 600 700 (a) (b) (c) Costs ($000s) y 40 45 50 65 70 70 80
xy
x2
y2
Calculate the regression line Calculate the coefficient of correlation Calculate the coefficient of determination
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PAPER F2
RELEVANT COSTING
Example 1 500 kg of material are needed for a special contract. There are 200 kg in stock, which was purchased for $2 per kg.. The current purchase price is $2.20 per kg.. The material is in regular use. What is the relevant cost?
Example 2 600 kg of material are needed for a special contract. There are 400 kg in stock, which was purchased for $5 per kg. The current purchase price is $7 per kg, and the current realisable value is $6 per kg. The company has no other use for this material. What is the relevant cost?
Example 3 A contract needs 200 hours of labour. Labour is paid $8 per hour, and the company has spare capacity. What is the relevant cost?
Example 4 A contact needs 300 hours of labour. Labour is paid $6 per hour. There is no spare capacity, and the labour would have to be transferred from other work producing units that earn a contribution of $14 per unit and take 2 hours per unit to produce. What is the relevant cost?
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PAPER F2
LABOUR COSTS
Ratios: Production Volume Ratio = Expected hours to make output Hours budgeted Actual hours worked Hours budgeted Expected hours to make output Actual hours worked
Capacity Ratio =
Efficiency Ratio =
Piecework:
Example Firm had 200 employees at start of the year, and 160 at the end of the year. During the year 50 employees had left. Answer Number of employees fell by 40, so if 50 left 10 must have been replaced. Average number of employees 200 +160 Average number of employees = = 180 2 Labour turnover rate = 10 100% = 5.56% 180
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PAPER F2
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PAPER F2
Labour is paid $4 per hour, and there is a maximum 8,000 hours available. How many units of each should be produced to maximise profit?
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PAPER F2
Labour is paid $5 per hour, and there are only 5,000 hours available. The units may be purchased from a supplier at costs of F:$22p.u., and G: $26p.u. How many units of each should be produced, and how many purchased from the supplier, in order to minimise costs?
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PAPER F2
VARIANCES MATERIALS
Standard cost of materials: 20 kg at $4 per kg = $80 per unit
During the month we produced 5000 units. We purchased 120,000 kg of material and paid $500,000 We used 105,000 kg in production (the other 15,000 kg are in inventory)
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PAPER F2
VARIANCES LABOUR
Standard cost of labour: 8 hours at $3 per hr = $24 per unit During the month we produced 6000 units. We paid for 52,000 hours of labour at the rate of $3.20 per hour. We worked 49,500 hours.
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PAPER F2
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PAPER F2
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PAPER F2
VARIANCES SALES
We budgeted to sell 10,000 units. The standard selling price is $20 per unit. The standard costs are: Variable costs $12 per unit Fixed costs $ 5 per unit The actual sales were 12,000 units at a selling price of $19 per unit Absorption costing: Sales price variance:
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