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Hey sir,
Just confused with a calculation part of the following questionCorrie Produces 3 products X Y & 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 1200 units of X per hour,1500 units of Y per hour and 600 units of Z per hour.
Selling prices and material costs for each product are as follows
Product has selling price 150 material cost 70 and throuhput 80
Y selling price 120 mat costs 40 and throughput 80
Z selling price 300 mat costs 100 throughput 200.
Conversion costs 720,000
Calacukate throughput ratio.
In the ans they have done $80x(60÷.05)=96000 as throughput per house for product X and similarly for Y and Z.my question is do we need to do 60÷.05 (X) 60÷.04 (Y) and 60÷ .10 (z) for x,y,z respectively as their amounts of 1200 1500 and 600 are also given in the question .do we just take the throughput per unit and multiply it into the units per hour.To get the throughput per hour, you can either divide the throughput per unit by the hours per unit, or alternatively you can multiply the throughput per unit by the number of units per hour.
Both will give exactly the same answer 🙂
hi sir ,
in this question how u get 0.05 ?? 0.04 Nd 0.10 and what is that actually ?If they produce 1200 of X per hour, then the time for 1 unit is 1/1200 x 60 = 0.05 minutes.
sir in your explanation u said to get throughput u can divide throughput per unit by hours per unit ,so here the throughput for x is $60 . Whhat is hour per unit ? here if we take its like 1/1200 = 0.00083 hr so your saying to divide $60 by 0.00083 ? then we wont get the same answer
please help sir iam confused.You can do it in hours or you can do it in minutes.
Since here the time for each unit is very small, it is easier to do it in minutes.
Whichever you do – everything in hours or everything in minutes, you will end up with exactly the same answer.
Hi Sir,
in order to get factory cost per factory hour we must have the total time of the bottleneck resource how we can the total time here
here we have only the time of 8 hours per day
can we say 365 days x 8 =2920 per yearhere there no period specified
The original question said that the conversion costs were per day (Ryan didn’t type that because he was not asking about that).
Since there are 8 hours in a day, the cost per factory hour is 720,000/8 = 90,000
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