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John Moffat.
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humai
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1) Sir, if divison has spare capacity then it means unlimited production capacity?
2) methods to improve TA ratio suxh as increase selling price of good, reduce variable cost of good .. this only apply to that goods which is produced from bottle neck resource, or does it apply to those goods also which are produced from non bottle neck resource?
John Moffat
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1. Not necessarily. It depends on the information given in the question. I might have capacity to produce 1,000 units but am currently only producing 600 units. That means that I have spare capacity to produce another 400 units – which is not unlimited!
2. All of the goods will use the bottleneck resources. They all pass through each of several processes and one of them will always be the bottleneck.
humai
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