ADMS 2510 Final Exam W 2005 Solutions

ADMS 2510 Final Exam W 2005 Solutions - YORK UNIVERSITY:...

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ADMS2510 3.0 Final Examination: Winter 2005: 13 th April 2005: 7-10 pm Solutions: Question 1: (25 marks): You have been hired by the President of Electric Motors & Computing Corp. (EM&CC) to provide advice on 3 issues. EM&CC has a number of divisions, each with their own manager. The following information is taken from the 2003 accounting records of East Sales \$12,000,000 Variable costs 4,000,000 Contribution margin \$ 8,000,000 Direct fixed costs 5,000,000 Segment income \$ 3,000,000 ========= At the beginning and end of 2003, East Coast Marketing had total assets of \$6,000,000 and \$4,000,000 respectively. Required: Issue 1: (6 marks) 1a) Compute the asset turnover ratio (2 marks) Asset turnover = sales/assets = \$12,000,000/\$6,000,000 = 2 times Or, using average assets: \$12,000,000/\$5,000,000 = 2.4 times 1b) Calculate the profit margin ratio (based on segment income) (2 marks) Profit margin = income/sales = \$3,000,000/\$12,000,000 = 25% 1c) Calculate the return on investment (2 marks). ROI = income/assets = \$3,000,000/\$6,000,000 = 50% Or, using average assets = \$3,000,000/\$5,000,000 = 60%

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Issue 2: (8 marks): The Cambridge Division of EM & CC manufactures circuit breakers. The company evaluates managers on the basis of both financial and non-financial results. The following data relate to the throughput of the Cambridge plant: Units started into production: 350,000; Good units completed: 300,000; Total production hours: 20,000; Value-added production hours: 17,500. Required: 2a) Calculate the manufacturing cycle efficiency (2 marks): Manufacturing cycle efficiency = value added time/total time: 17,500/20,000 = 87.5% 2b) Calculate the process productivity (2 marks); Process productivity = total units processed/value-added time: 350,000/17,500 hours = 20 units per hour 2c) Calculate the process quality yield (2 marks): Process quality yield = good units/total units processed: 300,000/350,000 = 85.7% 2d) Calculate the throughput per hour (2 marks): Throughput = good units/total time: 300,000/20,000 = 15 units per hour (Check: Throughput = MCE * PP * PQY = 87.5% * 20 * 85.7% = 15)
Required: Issue 3: (6 marks) The President wants to know how the compensation plan that is used to provide annual pay increases to managers should relate to the overall goals and 1. A good compensation plan tries to tie together the elements of

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This note was uploaded on 12/12/2011 for the course ECON 101 taught by Professor Bi during the Spring '11 term at York University.

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ADMS 2510 Final Exam W 2005 Solutions - YORK UNIVERSITY:...

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