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Hi. I have the following question below. I can understand everything apart from how they are working out the throughput per hour where is the 60/0.5 coming from?
Corrie produces three products, X, Y and Z. The capacity of Corrie’s plant is restricted by process alpha. Process alpha is expected to be operational for eight hours per day and can produce 1,200 units of X per hour, 1,500 units of Y per hour, and 600 units of Z per hour.
Selling prices and material costs for each product are as follows.Product. Selling price. Material. Throughput pu
X. 150 70. 80
Y. 120. 40. 80
Z. 300. 100. 200Conversion costs are $720,000 per day.
Required throughput ratio for each productAnswer
Product. Throughout per hour. Cost per hour
X. 80 x (60/0.05 min). 96k
Y. 80 x (60/0.04 min). 120k
Z. 200 x (60/0.10 min). 120kThanks in advance
AJ
Although the answer is correct, I don’t know why they have shown it in that way.
For product X, is 1200 units are produced per hour, then the time for one unit is 1/1200 hours.
So, the throughput per hour = 80 / (1/1200) = 80 x 1200 = 96,000
The same logic applies to the other two products.
hello sir if i may agree this logic can also work throughtput return by unit per hours can give you throughtput per hour
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