QUESTION 1 [25 Marks]
Muzi Corporation produces three products at two different plants. The cost of producing a unit at each plant is given in the following table.
Each plant has the capacity to produce a total of 10 000 units. Demand for at least 6 000 units of product 1, at least 8 000 units of product 2 and at least 5 000 units of product 3 must be met. Muzi wishes to minimise costs. The decision variables are defined as follows:
Pij = the number of units of product j produced at plant i, where i = A, B and j = 1, 2, 3.
(a) Formulate the problem as a linear programming (LP) model. (4 marks)
(b) Solve the model using LINDO SOLVER. (4 marks)
Using only the initial printout of the optimal solution, answer the following questions. (This means that you may not change the relevant parameters in the model and do reruns.) Explain how you arrive at your answers.
(c) Write down the optimal solution and the associated total costs. (3 marks)
(d) Give the optimal solution and total costs if
(i) plant B has 9 000 units of capacity;
(ii) plant A has 12 000 units of capacity. (2 x 2 = 4 marks)
(e) What would the total costs be if the demand for product 2 reduces to 4 000 units? (2 marks)
(f) What would the cost of producing product 2 at plant A have to be for the firm to make this choice? (2 marks)
(g) What would the new optimal solution and total costs be if
(i) The new cost of producing a unit of product 3 at plant A is R8,50? (2 marks)
(ii) A new production process is introduced at plant B which reduces the cost of
production of all products by R1 per unit? (2 marks)
(h) The workers at plant B have just completed a course on product 1 and the production
manager suggests that 1 000 units of product 1 be produced at plant B. How will this affect
the total cost? (2 marks)
SHOW WORK IN EXCEL!
ABC Corporation acquired 100 percent ownership of XYZ Products on January 1, 2018.
for $200,000. On that date, XYZ reported retained earnings of $50,000 and had $10,000 of common stock outstanding and $90,000 of Paid in Capital
ABC has used the equity method of accounting for its investment in XYZ.
On the date of the business combination, the fair value of Lamb’s depreciable assets
were $20,000 more than book value. The differential assigned to depreciable
assets is amortized over 10 years. In addition, notes payable is overvalued by $15,000 and has
a remaining life of 5 years. Any remaining acquisition differential is assigned to goodwill, which is
not impaired at December 31, 2018.
There was $10,000 of intercompany receivables/payables as of 12/31/18
1. Prepare the acquisition analysis as of acquisition date. Compute the
unamortized differential as of 1/1/2018.
2. Verify the calculation of the balance in the acccount equity in sub
earnings and record the parent company entries with respect to its equity
investment in sub
3. Calculate Net Income Allocated to the Controlling Interest
4. Prepare all elimination entries for 2018
5. Complete the consolidating spreadsheet for the year ended 2018.