MGT402 Current Midterm Paper Fall 2013 Shared by ss File 4

MY ANSWERS ARE

Q1 5 mark

It is impossible for a person who is working in assembly line or associated with manufacturing unit, to increase his output without the assistance of entire group of workers so for this reasons companies have introduced the group bonus scheme.

Following are common characteristics of Group Bonus Scheme

1. A standard time is set for the completion of job

2.If the time taken by worker is more than the time allowed  the workers in the group receive time wages

3.If the time take by worker is less than the time allowed then group receives a bonus on time saved.

Q2  3mark

in order to arrive at cost per unit of output, total of each cost element is divided by the number of units produced. For this purpose where at end of costing period, there are some partially competed units in process and these units must be stated in terms of equivalent completed units. Then these equivalent completed units are added to units completed units to arrive at equivalent production. Then total cost is divided by this equivalent production number to calculate the unit cost.

Q3. 3MARK

OAR is calculated by following formula

OAR   = Estimated FOH cost / Base

Following can be the bases to calculate OAR

Direct labor hours

Machine hours

Prime cost

No. of units produced

Direct labor cost

selection of capacity level depends on the nature of business, and if it depends on the machine hours then machine hours will be taken as a base as capacity level, it is also known as overhead absorption rate (OAR)