322_practise final

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Simon Fraser University *

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322

Subject

Economics

Date

Jan 9, 2024

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docx

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15

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Formula Sheet Gross Margin = Revenue – COGS Reorder point = Lead time × Average daily or weekly usage OEE = Availability × Performance × Quality Price variance = AQ (AP – SP) Quantity variance = SP (AQ – SQ) 1
Question 1 Part A Medical Lab Supplies distributes medical supplies and equipment throughout North America. Selected information related to a quick-developing X-ray film carried by the company is given below: Management is trying to determine the proper safety stock to carry on this inventory item and to determine the proper reorder point. Economic order quantity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 units Maximum weekly usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 units Lead time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 weeks Average weekly usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 units Required: a) Assume that no safety stock is to be carried. What is the reorder point? (2 Marks) b) Assume that a full safety stock is to be carried. What is the size of the safety stock in units? What is the reorder point? (5 Marks) 2
Part B Amazon operates a customer call center in Vancouver, which it employs 2 work shifts of 30 employees each. The call center operates 7 days per week. Each work shift lasts 8 hours, and each employee gets paid breaks totaling 1 hour. Breaks are staggered so that the call center is available to customers for the full 8 hours per shift. During a recent week, the first shift had actual operating time of 1,200 hours. Calling records showed that the actual time to complete a call averaged 5.3 minutes, but the expected time per call was 4.5 minutes. During this week, the first shift completed 11,000 calls, of which 1,100 were repeat calls from customers whose problems were not resolved during the first call. Repeat calls are counted as defective calls. Required: Compute the first shift’s overall equipment effectiveness. 3
Question 2 Slyman Manufacturing Inc. has developed the following standards for one of its products. The materials are not substitutable. Material 1 5 yards $6/yard $30 Material 2 6 pieces $5/piece $30 Direct labor 3 hours $24/hour $72 Total variable cost per unit $132 4
The records for March showed the following actual results: Purchased 10,000 yards for $58,000 Used 9,500 yards Purchased 15,000 pieces for $78,750 Used 12,100 pieces Direct labor Units produced Material 1 Material 2 5,900 hours for $147,500 2,000 units Required: a) Calculate the material purchase price variance for material 1. (2 Marks) b) Calculate the material quantity variance for material 1. (2 Marks) c) Calculate the material purchase price variance for material 2. (2 Marks) d) Calculate the material quantity variance for material 2. (2 Marks) e) Calculate the labor rate variance. (2 Marks) f) Calculate the labor efficiency variance. (2 Marks) g) For each question above, indicate whether the variance is favorable or unfavorable. (3 Marks) 5 a. 58000-10000*6 = -2000 F b. 6*(9500-5*2000) = -3000 F c. 78750-5*15000 = 3750 U d. 5*(12100-6*2000) = 500 U e. 147500-24*5900 = 5900 U f. 24*(5900-3*2000) = -2400 F
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