Question

Multiple choices (show hand calculate)  

- LAMA Creations creates sweaters using the wool of the Llama. The wool used in the manufacturing process is ordered by the bundle. LAMA requires 1,200 bundles of Llama wool per year and places orders of 100 bundles at a time. The cost of ordering is $80.00 per order and the carrying cost per bundle is $3.50. What are LAMA Creations’ ordering costs?

a) $350.00

b) $480.00

c) $960.00

d) $1,060.00

- Animal Treats Company has 500 kg of liver-flavoured dog biscuits that are not selling well. The selling price of the biscuits could be reduced from $3.10 to $2.65 per kg. Or, they could be cheese-coated and sold for $4.25 per kg; the additional processing cost would be $0.40 per kg. Cheese-coated biscuits sell very well. Which alternative probably has less uncertainty

concerning volume of sales?

a) Reduce the price of liver-flavored biscuits

b) Proceed with the cheese coating

c) Both alternatives are uncertain

d) Uncertainty does not affect this decision

- How does the use of sophisticated information systems affect managerial decision-making?

a) Sophisticated information systems always improve managerial decision-making

b) Sophisticated information systems always provide better information

c) Managers may rely more on information reports than on their own biases

d) The cost of sophisticated information systems may exceed their benefit

- Which of the following statements about performance evaluation is true?

a) Nonfinancial measures are less useful than financial measures because they are not as objective

b) Financial measures are less useful than nonfinancial measures because they are biased

c) A combination of financial and nonfinancial measures gives a more useful picture of organizational performance than either one alone

d) Only one or two nonfinancial performance measures should be used

- Bava Company wants to develop a cost function for its maintenance costs to estimate such

costs for the coming year. The following data are available:

Month	Direct Labour Hours	Maintenance Costs Incurred
June	4,000	$ 900
July	6,500	$ 1,325
August	7,000	$ 1,500
September	5,500	$ 1,150

a) $1.00

b) $0.10

c) $0.20

d) $1.50

Answer 1

1.Requirement = 1200 bundles

Order Quantity = 100 bundles

No. Of Orders = 1200/100 = 12

Cost per Order= 80

Ordering Cost = 12*80 = $960

i.e. c

2. b) Proceed with the cheese coating

Since it is mentioned in the question that Cheese coated biscuits sell very well. Hence, this alternative has less uncertainity concerning volume of sales.

3. a) Sophisticated information systems always improve managerial decision-making

Since the question is concerned about decision making

4. c) A combination of financial and nonfinancial measures gives a more useful picture of organizational performance than either one alone