Question 1

An agricultural equipment manufacturer is preparing its production budget. Maximum market demand for its main tractor model is 5,000 units. Each tractor requires 4 tons of specialized steel. The company's supplier can only provide a maximum of 15,000 tons of this steel for the year. There is no opening or closing inventory of steel or tractors.

Calculate the maximum number of tractors that can be produced, identifying the principal budget factor. (Enter the number of tractors only)

Accepted Answer

1. Determine total material needed for max demand. 2. Compare to available material to identify the limiting factor. 3. Calculate production based on the limiting factor.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Entering 5000 (ignoring the material constraint) or entering the tonnage (15000).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 4

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