Question

Question 1 ( 40 marks)


Corvine Corporation makes two types of motors for use in various products. Operating data and unit cost information for its products are presented next.

Product A
Product B
Annual unit capacity
10,000
20,000

Annual unit demand

10,000

20,000



Selling price
$100
$80
Variable manufacturing cost
53
45
Fixed manufacturing cost
10
10
Variable selling and administrative
10
11
Fixed selling and administrative
5
4
Fixed other administrative
2
0
Unit operating profit
$20
$10



Machine hours per unit
2.0
1.5

Corvine has 40,000 productive hours available.

Required

Calculate the relevant contribution margin, per machine hour for each product, to be utilized in making a decision on product priorities for the coming year.



Question 2( 20 marks)


a-    Provide brief information about the IMA(Institute Of Management Accountants) , its history , mission , vision , core values , conditions for membership …etc.( not more than 200 words) ( 10 marks)

b-    Identify the ethical principles & standards that should guide the work of a Management accountant. (Refer to the Statement of Ethical Professional Practice) ( 10 marks)

Answer 1

Answer to question 1:

Calculation of Contribution margin per unit is as follows:

	Product A	Product B
Selling price	$ 100	$ 80
Less: Variable cost:
Variable manufacturing cost	$ 53	$ 45
Variable selling & administrative	$ 10	$ 11
Contribution margin per unit	$ 37	$ 24
Machine hours required per unit	2	1.5
contribution margin, per machine hour	$18.50	$16
Priority to be sold	1	2