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Sweet Treats Bakery makes three types of cake: brownies, muffins and cupcakes.
The costs, revenues and demand for each of the three cakes are as follows:
Brownies Muffins Cupcakes
Batch size (units) 40 30 20
Selling price ($ per unit) 1.50 1.40 2.00
Material cost ($ per unit) 0.25 0.15 0.25
Labour cost ($ per unit) 0.40 0.45 0.50
Overhead ($ per unit) 0.15 0.20 0.30
Minimum daily demand (units) 30 20 10
Maximum daily demand (units) 140 90 100
The minimum daily demand is required for a long-term contract with a local cafe and must be met.The cakes are made in batches using three sequential processes; weighing, mixing and baking. The products must be produced in their batch sizes but are sold as individual units.
Each batch of cakes requires the following amount of time for each process:
Brownies Muffins Cupcakes
Weighing (minutes) 15 15 20
Mixing (minutes) 20 16 12
Baking (minutes) 120 110 120
The baking stage of the process is done in three ovens which can each be used for eight hours a day, a total of 1,440 available minutes. Ovens have a capacity of one batch per bake, regardless of product type.Sweet Treats Bakery uses throughput accounting and considers all costs, other than material, to be ‘factory costs’ which do not vary with production.
On Monday, in addition to the baking ovens, Sweet Treats Bakery has the following process resources available:
Process Minutes available
Weighing 240
Mixing 180
Which of the three processes, if any, is a bottleneck activity?A.Weighing
B.Mixing
C.Baking
D.There is no limiting factorYou must not type out full questions like this because they are copyright of the ACCA. I have all past exam questions and so in future just state the name of the question and the date of the exam (or the number of the question in the current edition of the BPP Revision Kit).
You know how many batches of each are being made in order to meet maximum demand. For Brownies it is 140/40 = 4 batches; for Muffins it is 90/30 = 3 batches; and for Cupcakes it is 100/20 = 5 batches. (They cannot make ‘part’ batches).
You know how many minutes each batch takes in each process.
So the total time needed for Weighing is (4 x 15) + (3 x 15) + (5 x 20) = 205 minutes
In the same way, the time needed for Mixing is 188 minutes, and for Baking is 1,410 minutes.They have enough time available to meet the maximum demand in Weighing and in Baking, but for Mixing they only have 180 minutes, not the 205 minutes that would be needed.
Therefore it is Mixing that is limiting the production and is therefore the bottleneck activity.
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