1. NORTHERN CARIBBEAN UNIVERSITY
COLLEGE OF BUSINESS & HOSPITALITY MANAGEMENT
DEPARTMENT OF BUSINESS ADMINISTRATION & HOSPITALITY MANAGEMENT
ACCT 346: Performance Management Accounting
Group Assignment due Tuesday March 26, 2013
Question 1
An organisation has market demand of 50,000 units for a product that goes through three processes:
cutting, heating and assembly. The total time required in each process for each product and the total
hours available are:
Process Cutting Heating Assembly
Hrs per unit 2 3 4
Total hours available 100,000 120,000 220,000
Required:
a) Calculate the time required to produce the 50,000 units of the product in each process and
identify the process where bottleneck is present. (3 Marks)
b) Calculate how many units of the product the organisation will be able to produce without having
inventory of work-in-progress on hand. (2 Marks)
Question 2
Beta Co produces 3 products, E, F and G, details of which are shown below:
E F G
$ $ $
Selling price per unit 120 110 130
Direct material cost per unit 60 70 85
Maximum demand (units) 30,000 25,000 40,000
Time required on the bottleneck resource 5 4 3
(hours per unit)
There are 320,000 bottleneck hours available each month.
Required: (15 Marks)
a) Calculate the throughput per unit for each product. (3)
b) Calculate the throughput return per hour of bottleneck resource. (3)
c) Rank the products in order of the priority in which they should be produced, starting with
the product that generates the highest return per hour first. (1)
d) Calculate the optimum production plan, allocating the bottleneck resource to each one in
order, being sure not to exceed the maximum demand for any of the products. (5)
e) Calculate the total contribution to be made by Beta Co. within the 320,000 bottleneck hours
if the optimum production plan is followed. (3)