B292 MTA
Arab Open University Faculty of Business Studies
Mid Term Exam B292
FirstSemester 2013-2014
Time Allowed: 2Hours
Instructions:
1. Read each question carefully and make sure that you understand it before you begin to answer it.
2. This exam consists of TWO Compulsory parts.
Part A: has 3 Questions
Part B: has 3 Questions
3. The use of non-programmable calculators is permitted in the examination.
4. In questions that require calculations, credit will be given for showing your workings.
Part A:
1 - The value Chain is a tool developed by Michael Porter to help organizations develop a competitive advantage through a better understanding of the activities through which they create value.
Draw a diagram that describes Porter's Value Chain. Discuss the elements of primary and secondary activies that make up the value chain of an organisation and give examples.
2 - Gamma Company makes boats and has the following costs at the given levels of production:
Month
Units Produced
Total Costs
January
20
$ 20,000
February
25
22,500
March
30
25,000
April
35
27,500
May
40
30,000
June
45
32,500
Required:
a. Use the high-low method to compute the variable and fixed elements of Gamma’s total costs.
b. Estimate the total cost of making 50 boats, assuming that total fixed costs and the variable cost rate do not change.
3- The Manager of Alpha company is considering droping product C. the fixed cost is allocated equally between three departments. Using the data below you have been asked to recommend, and provide justification, as to whether product C should be dropped.
Product A
Product B
Product C
Total
Sales Revenues
120,000
150,000
130,000
400,000
Variable costs
70,000
80,000
100,000
250,000
Fixed costs
30,000
30,000
30,000
90,000
Net income(loss)
20,000
40,000
0
60,000
[Marks: (20+20+10) = 50]
Part B:
1- Discuss the benefits of a Just-In-Time inventory control system for an organisations considering its implementation. Also highlight in your discussion the possible
Mid Term Exam B292
FirstSemester 2013-2014
Time Allowed: 2Hours
Instructions:
1. Read each question carefully and make sure that you understand it before you begin to answer it.
2. This exam consists of TWO Compulsory parts.
Part A: has 3 Questions
Part B: has 3 Questions
3. The use of non-programmable calculators is permitted in the examination.
4. In questions that require calculations, credit will be given for showing your workings.
Part A:
1 - The value Chain is a tool developed by Michael Porter to help organizations develop a competitive advantage through a better understanding of the activities through which they create value.
Draw a diagram that describes Porter's Value Chain. Discuss the elements of primary and secondary activies that make up the value chain of an organisation and give examples.
2 - Gamma Company makes boats and has the following costs at the given levels of production:
Month
Units Produced
Total Costs
January
20
$ 20,000
February
25
22,500
March
30
25,000
April
35
27,500
May
40
30,000
June
45
32,500
Required:
a. Use the high-low method to compute the variable and fixed elements of Gamma’s total costs.
b. Estimate the total cost of making 50 boats, assuming that total fixed costs and the variable cost rate do not change.
3- The Manager of Alpha company is considering droping product C. the fixed cost is allocated equally between three departments. Using the data below you have been asked to recommend, and provide justification, as to whether product C should be dropped.
Product A
Product B
Product C
Total
Sales Revenues
120,000
150,000
130,000
400,000
Variable costs
70,000
80,000
100,000
250,000
Fixed costs
30,000
30,000
30,000
90,000
Net income(loss)
20,000
40,000
0
60,000
[Marks: (20+20+10) = 50]
Part B:
1- Discuss the benefits of a Just-In-Time inventory control system for an organisations considering its implementation. Also highlight in your discussion the possible