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Sir, how to calculate efficiency subquestion 2
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 cost
Throughput
contribution
$ per unit $ per unit $ per unit
X 150 70 80
Y 120 40 80
Z 300 100 200
Conversion costs are $720,000 per day.
Required
(i) Calculate the profit per day if daily output achieved is 6,000 units of X, 4,500 units of Y and 1,200
units of Z.
(ii) Determine the efficiency of the bottleneck process given the output in (a).thanks in advance
It is the number of hours that process alpha is working to produce the output achieved, expressed as a % of the number of hours it is operational.
Sir why 60/ 1200
Minutes in alpha
Product per unit
X 60/1,200 = 0.05
Y 60/1,500 = 0.04
Z 60/600 = 0.10 ,There are 60 minutes in an hour.
If they produce 1,200 in one hour, then the time for each is 1/1,200 x 60 = 0.05 minutes
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