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Gary Company Produces Products X, Y, and Z from a Single

question 53

Multiple Choice

Gary Company produces products X, Y, and Z from a single raw material input. Budgeted data for the next month is as follows: $\begin{array}{lrr}&&\text { product }\\& \text { X} & \text { Y } & \text { Z } \\ \text {Units produced. } &2,500& 3,000 & 4,000\\ \text { Per unit sales value at split-off.} & £ 20.00&£ 22.00&£ 25.00\\ \text {Added processing costs per unit. } &£ 8.00&£ 8.50& £ 8.00 \\ \text {Per unit sales value if processed further. } &£ 30.00 & £ 30.00 &£ 35.00\\\end{array}$

If the cost of raw material input is £150,000, which of the products should be processed beyond the split-off point?
$\quad$ $\quad$ $\quad$ $\text { Product }$
$\begin{array}{lrr}&&\\ &\text {X}&&\text {Y}&&\text {Z}\end{array}$

A. $\begin{array}{lrr} \text { no } & \text { yes }& \text {no } \\\end{array}$
B. $\begin{array}{lrr} \text {no} & &\text {yes } & \text { yes }\\\end{array}$
C. $\begin{array}{lrr} \text {yes } & \text { no }& \text {yes } \\\end{array}$
D. $\begin{array}{lrr} \text {yes } & \text { yes }& \text { no }\\\end{array}$

Recognize the impact of managerial decisions on divisional performance metrics.

Learn the calculation and application of the manufacturing cycle efficiency (MCE).

Understand the process and significance of calculating delivery cycle time.

Calculate and interpret the minimum required rate of return.

Definitions:

Government Bonds

Debt securities issued by a government to finance its expenditures, considered low-risk investments.

Interest Rates

The cost of borrowing money or the return on invested funds, typically expressed as a percentage of the principal.

Investment Spending

Expenditure on physical assets like machinery, buildings, or equipment, intended to create future benefits.

Hyperinflation

An extremely high and typically accelerating rate of inflation, often exceeding 50% per month, leading to a rapid erosion of the real value of local currency.