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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 dayWhat is the efficiency of the bottleneck process given the output achieved is 6,000 units of
X, 4,500 units of Y and 1,200 units of Z?MY QUESTION: In the book’s answer, they convert hours to minutes and calculate that way, but I didn’t understand the logic behind it. Can you enlighten me, Sir?
So the conversion of hours to minutes allows for a more comprehensive calculation, making it easier to understand the time required for production relative to the available operational time.
You convert hours to minutes to make the calculations more precise. Since the process is operational for 8 hours per day, this translates to 480 minutes (8 hours x 60 minutes/hour).
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