Capacity Utilization – NBC Institute

MI – Nov 2022 – L1 – SB – Q2 – Decision-making techniques

Analysis of production capacity for an additional order

Question

Monsur Limited manufactures shirts for sale. The cost of production per unit is as stated below:

Costs	N
Selling price	1,000
Materials	300
Labour	150
Variable overhead	150

The fixed overhead cost is N1,000,000. Production is currently at 80% capacity, which is 4,000 units. The company just received an order for the production of 1,000 units of the shirts for N800 per unit.

Required:
a. Can Monsur produce the additional 1,000 units ordered considering its current capacity? Show your computation.
b. Compare the profit statements of the company
i. Based on current position (4,000 units)
ii. Based on acceptance of the order (1,000 additional units)
iii. Should the order be accepted? State your reason(s).

Answer

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Tags: Capacity Utilization, Production Analysis, Short-Term Decision
Level: Level 1

Topic: Decision-making techniques
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

Question

A business operates a guest house with 80 single room suites and 40 double room suites.
During the year in review:

The rent of the double room suite is twice that of the single room.
The occupancy of the single room suites is 100%, while that of the double room suites is 75%.
Assume that the year has 365 days.

Required:
Calculate the total number of room suites occupied during the year.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Room Occupancy, Service Costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

Question

Which of the following costs vary with capacity utilization?
A. Straight line depreciation
B. Production manager’s salary
C. Factory rent
D. Piece rate wages
E. Plant hire

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Cost behavior, Variable Cost
Level: Level 1

Topic: Costing Techniques
Series: MAY 2016

MI – Nov 2022 – L1 – SB – Q2 – Decision-making techniques

Analysis of production capacity for an additional order

Question

Monsur Limited manufactures shirts for sale. The cost of production per unit is as stated below:

Costs	N
Selling price	1,000
Materials	300
Labour	150
Variable overhead	150

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Production Analysis, Short-Term Decision
Level: Level 1

Topic: Decision-making techniques
Series: NOV 2022

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

Question

A business operates a guest house with 80 single room suites and 40 double room suites.
During the year in review:

The rent of the double room suite is twice that of the single room.
The occupancy of the single room suites is 100%, while that of the double room suites is 75%.
Assume that the year has 365 days.

Required:
Calculate the total number of room suites occupied during the year.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Room Occupancy, Service Costing
Level: Level 1

Topic: Costing Methods
Series: NOV 2022

MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

Question

Which of the following costs vary with capacity utilization?
A. Straight line depreciation
B. Production manager’s salary
C. Factory rent
D. Piece rate wages
E. Plant hire

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capacity Utilization, Cost behavior, Variable Cost
Level: Level 1

Topic: Costing Techniques
Series: MAY 2016

Question Tag: Capacity Utilization

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MI – Nov 2022 – L1 – SB – Q2 – Decision-making techniques

Analysis of production capacity for an additional order

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

MI – Nov 2022 – L1 – SB – Q2 – Decision-making techniques

Analysis of production capacity for an additional order

MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

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Question Tag: Capacity Utilization

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Analysis of production capacity for an additional order

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Calculation of total room suites occupied during the year

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MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

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MI – Nov 2022 – L1 – SB – Q2 – Decision-making techniques

Analysis of production capacity for an additional order

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MI – Nov 2022 – L1 – SB – Q1b – Costing Methods

Calculation of total room suites occupied during the year

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MI – May 2017 – L1 – SA – Q4 – Costing Techniques

Identify the cost that varies with capacity utilization.

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