Question 1 - Serra Industries is a fine food company producing burgers and sausages. It has 300 staff who work 8 hours a day, 5 days a week for 50 weeks. The demand for burgers and sausages does not exceed 50,000 and 150,000 kilos annually. Fixed factory overheads are applied on the basis of direct labour hours @$1 per hour.

The details per kilo of each product are as follows:

burgers Sausages

$ $

Sales 10 15

Variable costs 5 6

Contribution margin 5 9

Fixed costs 2 4

Profit 3 5

What is the maximum profit and most profitable mix of products?

Question 2 - Organic Food Stars Pty Ltd, ("OFS") is a small company that imports, manufactures and wholesales organic foods. OFS products are minimally processed and contain no artificial additives. In a world with growing interest in premium quality foods, OFS invests heavily in research and is building a reputation for its quality goods.

OFS has invested heavily in Research and Development. The R&D annual budget is $20 million for the current year. It employs a senior food scientist, five junior scientists and two administration staff. The goal of the R&D department is to develop high quality new products that are then tested and found to be acceptable for human consumption by an external quality testing agency. The agency provides specific feedback on the products and has even rejected products in the past. A rejected product results in high additional costs or severe losses to OFS.

Identify two (2) key KPI's for the Board to consider for each of the internal process and the learning and growth quadrants of the balanced scorecard for the R&D department.