ADMS3510F05Final

ADMS3510F05Final - Marking key (A & B Dec 20th, 2005)...

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th , 2005) Last name (surname): ____________________ First name: ____________________ Student ID#: ___________________________ Section: A: Tuesday. 7-10 p.m. Carol Riggs SC-302 B: Wednesday 7-10 p.m. Jamie Aldcorn SLH-B C: Thursday 7-10 p.m. John Harris SLH-E D: Internet John Parkinson How many tutorials (Saturday morning) did you attend: None 1 2 3 Sign-In Number (to be filled when you sign in only): _____________ YORK UNIVERSITY Atkinson School of Administrative Studies ADMS3510 3.0 Final Exam (A and B), Fall 2005 Tuesday December 20 th – 7:00 pm to 10:00 pm Instructions This is a closed book examination and no collaboration is allowed. There is a total of 100 marks Put your name and student number at the top of the page. Answer each question on the examination paper, and on the back of a page if necessary. You may write with a pencil or pen. You are allowed the use of a calculator. If your first language is not English, you are allowed the use of a dictionary. Three hours are allowed to complete the exam. If you leave early, please respect your fellow students by leaving quietly. Place photo identification on your desk during the examination to facilitate verification. Good luck. Question 1: / 25 marks Question 2: / 25 marks Case: / 50 marks TOTAL / 100 marks Question 1 (25 Points)
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19.24+19.25+19.26 Theory of constraints, throughput contribution, relevant costs The Tavola Corporation manufactures fine wood dinner tables in two operations: cutting and finishing. Additional information is as follows: Cutting Finishing Annual capacity 10,000 units 8,000 units Annual production 8,000 units 8,000 units Fixed operating costs (excluding direct materials) $640,000 $400,000 Fixed operating costs per unit produced ($640,000 / 8,000 and $400,000/8,000) $80 per unit $50 per Unit Each table sells for $720 and has direct materials costs of $320 incurred at the start of the cutting operation. Tavola has no other variable costs. Tavola can sell whatever output it produces. The following requirements refer only to the preceding data; there is no connection between the situations. REQUIRED 1. Tavola is considering using some modern jigs and tools in the finishing operation that would increase annual finishing output by 100 units. The annual cost of these jigs and tools is $30,000. Should Tavola acquire these tools? (4 points) Answer: Finishing is a bottleneck operation. Hence producing 100 more units will generate additional throughput contribution and operating income Increase in throughput contribution ($720 - $320) x 100 $40,000 Incremental costs of the jigs and tools $30,000 Net benefit of investing in jigs and tools $10,000 Tavola should invest in the modern jigs and tools because the benefit of higher throughput contribution of $40,000 exceeds the cost of $30,000 2. The production manager of the cutting Department has submitted a proposal to do faster setups that would increase the annual capacity of the Cutting Department by 1,000
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ADMS3510F05Final - Marking key (A & B Dec 20th, 2005)...

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