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Instructions:
Take a few moments to review the notes on the inside of this page titled, 'Get into good exam habits now!' before attempting this exam.
DO NOT OPEN THIS PAPER UNTIL YOU ARE READY TO START UNDER EXAMINATION CONDITIONS
ACF5PM13(D) EFM Questions The examination has been prepared for the December 2013 sitting
Effective planning
This paper is in exactly the same format as the real exam. You should read through the paper and plan the order in which you will tackle the questions. Always start with the one you feel most confident about and take time to choose the questions you will answer in sections with choice. Read the requirements carefully: focus on mark allocation, question words (see below) and potential overlap between requirements. Identify and make sure you pick up the easy marks available in each question.
Effective layout
Present your numerical solutions using the standard layouts you have seen. Show and reference your workings clearly. With written elements try and make a number of distinct points using headings and short paragraphs. You should aim to make a separate point for each mark. Ensure that you explain the points you are making ie. why is the point a strength, criticism or opportunity? Give yourself plenty of space to add extra lines as necessary, it will also make it easier for the examiner to mark.
Common terminology
Identify Discuss Describe Summarise Recommend Analyse Explain Illustrate Appraise/assess/ evaluate List relevant points Explain the opposing arguments Present the characteristics of State briefly the essential points Present information to enable the recipient to take action Determine and explain the constituent parts of Set out in detail the meaning of Use an example to explain something Judge the importance or value of
2 ACF5PM13(D) EFM Questions The examination has been prepared for the December 2013 sitting
ACF5PM13(D) EFM Questions 3 The examination has been prepared for the December 2013 sitting
Francis
Francis is a family business that produces bakery products and sells them at farmers markets throughout the country in which it operates. The business has had a rather unsuccessful year so far. Francis is planning for its busiest period over Christmas and New Year. The following information relating to Francis is available: Francis only produces two products a savoury product, the pasty and a cake product. Francis bakes both products in hired kitchens. They have a maximum time that the kitchen is available during the season of 1,000 hours. It takes 15 minutes to bake a batch of pasties or 30 minutes to bake a batch of cakes. Batch of pasties Selling price Variable costs per tonne Suet needed per batch of output Space required per batch $45 $15 35g 0.3m2 Batch of cakes $75 $15 100g 0.4m2
Francis is proud of its traditional ingredients and uses beef suet in both products. Poor planning has meant that the amount of suet available for production is limited to 140 kgs and no more can be bought. Francis has limited space at the markets. The total space available over the whole season is 960 m2. Francis believes that it should sell both products, pasties and cakes, as customers who buy one product will, on impulse, buy the other. For this reason, Francis wants to produce a minimum of 500 batches of each product. Required (a) Determine the optimal production plan for Francis, assuming that it is seeking to maximise contribution earned. You should use a linear programming graph, identify the feasible region, the optimal point and accurately calculate the maximum contribution that could be earned using whichever equations you need. (14 marks) What are the practical problems to Francis of using linear programming for making its decision on what to bake? (6 marks) (Total = 20 marks)
(b)
4 ACF5PM13(D) EFM Questions The examination has been prepared for the December 2013 sitting
Forssell
Forssell is a manufacturing company and it has developed an innovative new product, the Mikael, that it will manufacture. The product is unique and is protected by patents. The estimated time to make the first unit of production is 10 hours. It is estimated that an 80% learning curve will apply. Required (a) (b) Calculate the time needed to make the 8th Mikael. (You may assume that the learning curve would continue to apply for 8 units and that the learning index value for 80% is -0.3219). (4 marks) Explain the reasons why the learning effect will eventually cease for the Mikael. (3 marks)
Forssell plans to sell the Mikael in two separate markets and to charge different prices, if applicable, in each market. The demand functions in the markets are: Market 1: Market 2 where, X1 = annual sales in market 1 X2 = annual sales in market 2 Marginal revenue functions: Market 1: Market 2 MR1 = 165 0.3X1 MR2 = 600 1.2X2 P1 = 165 0.15X1 P2 = 600 0.6X2
A steady state will have been reached, and variable costs will be $120 per unit. Required (c) (d) Calculate the profit maximising quantity and price to produce and sell in each market. What conditions must hold for this price discrimination to be successful? (8 marks) The management accountant has suggested that Forssell should consider different pricing strategies in the introductory stage of the product. Briefly explain how the company would adopt the following strategies for the new product: (i) (ii) penetration pricing market skimming (5 marks) (Total = 20 marks)
ACF5PM13(D) EFM Questions 5 The examination has been prepared for the December 2013 sitting
Bowyer
Bowyer is a chemical manufacturer of pesticides. Information about one of its products Lo-Cane is given below. Standard Cost Card for one litre of Lo-Cane Chemical W X Y Z Volume ml 250 350 200 300 Standard cost / litre $ 25.00 12.50 35.00 10.00
These inputs are processed into the final product. Processing is complex and takes 6 minutes per litre of output. Each hour of processing time has a standard cost of $100 per hour. Last year, Bowyer produced 62,000 litres of Lo-Cane using the following inputs: Chemical W X Y Z Volume litres 19,000 22,000 13,000 21,500 Actual cost/litre $ 27.00 12.50 30.00 10.25
(Note there are 1000 ml in a litre) The actual time spent processing the actual output was 6000 hours at a cost of $650,000. Required (a) Calculate the individual input price and mix variances, and the total input yield variance for LoCane last year. (13 marks)
It has now been realised that Bowyer had employed more experienced staff last year in the processing function, and as such the standard time for processing should have been 5 minutes per litre. (b) (c) Calculate the planning variable processing cost efficiency variance for last year. (3 marks) Calculate the operating variable processing cost expenditure and efficiency variances for last year. (4 marks) (Total = 20 marks)
6 ACF5PM13(D) EFM Questions The examination has been prepared for the December 2013 sitting
The School is considering introducing a Value For Money audit to examine the economy, efficiency and effectiveness of the School. (b) (c) (d) Explain the concept of a VFM audit. Give two examples for each of the three areas of economy, efficiency and effectiveness for BHS. (6 marks) Discuss how achievement of measures of VFM may conflict with each other for BHS. (2 marks) In the for profit sector, rather than using just financial performance measures, some companies have introduced a Balanced Scorecard. Briefly state and explain the four perspectives of the Balanced Scorecard. (4 marks) (Total = 20 marks)
ACF5PM13(D) EFM Questions 7 The examination has been prepared for the December 2013 sitting
Exam formulae
Demand curve
P b a = a bQ =
change in price change in quantity
= price when Q = 0
MR = a 2bQ
Learning curve
Y = axb Where Y a x b LR = cumulative average time per unit to produce x units = the time taken for the first unit of output = the cumulative number of units = the index of learning (log LR/log 2) = the learning rate as a decimal
8 ACF5PM13(D) EFM Questions The examination has been prepared for the December 2013 sitting
Common problems
Timing and planning
Did you finish too early? Did you overrun? Y/N Y/N
Focus your planning time on generating more ideas. Use models to help develop width to your thinking. Focus on allocating your time better. Practise questions under strict timed conditions. If you get behind leave space and move on. Focus your planning time on developing a logical structure to your answer.
Y/N
Layout
Was your answer difficult to follow? Y/N Use headings and subheadings. Use numbering sequences when identifying points. Leave space between each point. Show why the point identified answers the question set. Give yourself time and space to make the marker's job easy.
Y/N
Content
Did you struggle with: Interpreting the questions? Y/N Learn the meaning of question words (inside front cover). Learn subject jargon (study text glossary). Read questions carefully noting all the parts. Practise as many questions as possible. Review your notes/text. Work through easier examples first. Contact a tutor for help. Quiz yourself constantly as you study. You need to develop your memory as well as your understanding of a subject..
Y/N
Y/N
ACF5PM13(D) EFM Questions 9 The examination has been prepared for the December 2013 sitting
BPP House, Aldine Place, London W12 8AA Tel: 0845 0751 100 (for orders within the UK) Tel: +44 (0)20 8740 2211 10 Fax: +44 (0)20 8740 1184
ACF5PM13(D) EFM Questions www.bpp.com/learningmedia The examination has been prepared for the December 2013 sitting