Practice question 1 Jack plc manufactures 2 products, Sweet and Sour.

The cost cards are as follows: Selling price Materials Labour Other variable costs Fixed costs Profit Machine hours p.u Maximum demand (units) The total hours available are (a) (b) (c) Sweet 28 10 6 8 2 26 2 2hrs 20,000 40,000. Sour 24 12 5 3 2 22 2 1hr 10,000

Calculate the optimum production plan and the maximum profit using conventional key factor. Calculate the optimum production plan and the maximum profit using throughput accounting approach. Calculate the throughput accounting ratios.

Practice question 2 Jerry plc produces three different products and has adopted throughput accounting for short-term decision. The employees are guaranteed a weekly salary that is equivalent to their normal working hours paid at their normal hourly rate of $7 per hour. The units are produced in batches of 100 units. Cost and selling price per batch are as follows: Unit Tom $/batch Dick $/batch 450 120 90 75 28 80 Harry $/batch 300 90 40 45 42 40

Selling price 350 Material X ($5/kg) 150 Material Y ($10/kg) 70 Material Z ($15/kg) 30 Labour ($7/hour) 21 Factory cost absorbed 20

Jerry plc is preparing its production plan and has estimated the maximum demand from its customers to be as follows: Batches Tom 500 Dick 400 Harry 400 However, these demand maximums do not include a contract for delivery of 100 batches of each product to an important customer. If this minimum contract is not satisfied then Jerry plc will have to pay a substantial financial penalty for non-delivery. Material Y is in short supply and the maximum amount available is 7,000 kg Required Prepare calculations to determine the production mix that will maximise the profit of Jerry plc.