At the Moslund Plant, the assembly line consists of 3 conveyor belts.

Which one of the following statements is supported by the information provided about the assembly line and the assembly-line modernization plan at the Moslund Plant?




Soln:
As given in the first tab-
Yr 10 : Output =250,000 and Profit = 15,000,000
For Yr 11- check third tab to find the changes in output and profit after Automation

1) Inspection Post Automation- Increased output by 2% and Profit by5% i.e Output =255,000 and Profit =15,750,000
2)Conveyor Belt speed increase -Increased output by 3% and Profit by 4% i.e Output = 257500 & Profit=15,600,000
3) Administrative cost- Increased profit by 1% i.e Profit=15,150,000

Now lets check each given choices

A. On the assembly line, conveyor-belt speed is directly proportional to total annual output of assembled units.
- We do not know what was the speed of conveyor belt, we only know output. So Eliminate

B. Administrative unit restructuring accounted for the greatest increase in the dollar amount of profit from Y10 to Y11.
- As cal above , administrative unit restructuring is not the greatest increase in dollar amt of profit. It is lowest among all three elements. So Eliminate

C. Conveyor-belt speed increase accounted for the greatest increase in the dollar amount of profit from Y10 to Y11.
- Clearly no , conveyor belt speed accounted less than automation so eliminate.

D. Conveyor-belt speed increase accounted for the greatest increase in annual output of assembled units from Y10 to Y11.
-CORRECT-- Yes as can been seen from cal done above . Conveyor belt increase accounted for greatest increase in output.

E. Inspection-post automation accounted for the greatest increase in annual output of assembled units from Y10 to Y11.
-No it is incorrect based on cal above. So Eliminate.

Hope it helps.

Question 2:

Part 1: No.

output in year 10 was 250,000 (Q) and the number of direct line workers (N) was 15.
250,000/15 = 16,666.67 which is > than 10,000 and therefore not less than 10,000

Part 2: No.
Q/N in year 10 is 16,666,67 as calculated in part 1.
If we know N decreased, and we know Q increased, then we know the number increased overall. When the numerator increases the number as a whole increases, when the denominator decreases the whole number increases. This means between the two years, Q/N did NOT remain unchanged.

Part 3: Yes.
Q/N is 16,666.67 from part 1, which is less than 30,000
Now we need to check year 11.
In year 11, they laid off 3 people, meaning they now only have 12 workers (N).
Between year 10 and 11, output increased by 5%, so output went from 250,000 => 262,500
(1.05)(250,000) = 262,500
Q/N = 262,500/12 = 21,875, which is also less than 30,000.

For each of the following statements about the Moslund Plant assembly line in Y11, select Yes if it is true based solely on the information provided. Otherwise, select No.

The assembly line generated a profit of $16,500,000. (Yes as this is 15m$ +10%)


Total output from the assembly line increased by 25,000 units over the total output for Y10. (No as 5% of 250K units is not equal to 25K units)


Administrative unit restructuring accounted for 1% of the total profit. (CAN SOMEONE PLEASE ADVISE ON THIS ONE?? WHY IS THE ANSWER NO SINCE IN THE TAB WE CAN SEE BELOW RESULTING INCREASE IN PROFIT 1%

I believe this is so because we have to account for the 'cost to implement,' which is $15000, when determining total profit.

Administrative unit restructuring accounted for an increase of 1% of Y10's profit; not 1% of total profit. As we do not know how much this factor accounted in Y10, this cannot be determined.

Angieless in the first question, why do you not subtract the cost to implement from the profit?
Obviously the initiatives increase the assembly line profit initially 10% ($15M * 1.1 = $16.5M), but would you not have to subtract the $160,000 cost to implement from that to be $14.9M in Y11? How do you know not to subtract cost to implement?

2794Aditya on the third question, it shouldn't matter how much it makes up of Y10 given that the question is asking about Y11. The total profit increases 1% (so $150,000, or $135,000 if you include the cost of implementation, to my first point). 150,000 / 16,500,000 would be less than 1% but round to 1%

Thanks all for any help you can provide

Administrative unit restructuring accounted for 1% of the total profit.
>>
Profit of Y10= $15,000,000.
Administrative unit restructuring accounts for increase in profit by 1% ( $15,000,000 *10% total mentioned = 1,500,000)== 150,000$
this 150k USD is increase.
We don't know how much Administrative unit restructuring accounts in $15,000,000.
then we can not calculate percentage of Administrative unit restructuring in total profit( we dont know how much Administrative unit restructuring accounts in Y10 profit. we only know in 1% of increase in profit)

:- Administrative unit restructuring accounted for 1% of the total profit.

Note that the statement above the table refers to the Moslund Plant assembly line in Y11.

1% increase of total profit (in 2010) = 15,000,000 x 1% = 150,000
1% total profit (in 2011) = 16,500,000 x 1% = 165,000

Since 150,000 does not equal 165,000 statement is false.

Hope it helps.

Can anybody please explain why A is wrong ?? because as i understand.. the speed of conveyor belt was increased by a fixed % and the resultant output because of it is 3%. and directly proportional means if one one quantity is increased the other increases and table clearly shows that 3% increase in output was because of conveyor belt speed increase. What am i not understanding correctly ??

Can you please explain why A is wrong ?? because as i understand.. the speed of conveyor belt was increased by a fixed % and the resultant output increase because of it is 3%. and directly proportional means if one one quantity is increased the other increases and table clearly shows that 3% increase in output was because of conveyor belt speed increase. What am i not understanding correctly ??

jj17: On choice A
- For Y11, all we know is that conveyer-belt speed increased by x%, resulting in 3% increase in total Y11 output.
- For Y12, let say the conveyer-belt speed were to increase by y%, resulting in z% increase in total Y12 output.

If x/3 = y/z, conveyer-belt speed is directly proportional to total annual output of assembled units. If x/3 ≠ y/z, conveyer-belt speed is NOT directly proportional to total annual output of assembled units. Since we don't know x, y, or z, we can't conclude that A is supported.

Can someone answer Angieless's first question? If the cost to implement all the improvements in the plan are accounted for, the profit would not be $16.5M. Why is the official answer Yes??

Is it D?

Which one of the following statements is supported by the information provided about the assembly line and the assembly-line modernization plan at the Moslund Plant?

A. On the assembly line, conveyor-beit speed is directly proportional to total annual output of assembled units.
We don't have enough information to infer this.

B. Administrative unit restructuring accounted for the greatest increase in the dollar amount of profit from Y10 to Y11.
Not enough information. Only percentages are given, not dollar amounts.

C. Conveyor-belt speed increase accounted for the greatest increase in the dollar amount of profit from Y10 to Y11.
Again, not enough info.

D. Conveyor-belt speed increase accounted for the greatest increase in annual output of assembled units from Y10 to Y11.
Correct. 3% > 2%

E. Inspection-post automation accounted for the greatest increase in annual output of assembled units from Y10 to Y11.
Wrong as per D.
_________________

What is the answer for question 2?

OA of Question #2 has been added, It is:

No, No and Yes.

Hi Sajjad1994 - sorry for posting this response a few years later but I don't see that anyone has clarified. For 2-a, the question asks if the profit is greater than 16.5 MM. When multiplying FY10 by 110% (for the 10% increase), the net profit is 16.5 MM; however, this is prior to removing the one-time expense in modernizing the production line.

Is there a hard-and-fast reason why these costs are not incorporated on this sub-question?

I have a question for (A).
But we know that the conveyor-belt speed increase and the resulting outputs both from conveyor-belt and from total increase. What can we not infer that the speed is proportional to the total output ?

I have a doubt about this one
because it doesn't matter what the initial speed or the final speed was, if increase in speed result in increase in output by 3% we can conclude that it is directly proportional.