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Hi sir i have a query re throughput from BPP question bank. The question was as follows:
Budget information relating to a company that manufactures four products is as follows.
Product Max Sales Max hrs Max machine Sales price Material cost Factory cost
Demand per unit hrs required per unit per unit per unit
Units $ $ $
A 1000 0.1 100 15 6 5
B 500 0.2 100 21 10 8
C 2000 0.3 600 18 9 6
D 1000 0.2 200 25 16 7
Only 750 machine hours are available during the period. Applying the principles of throughput accounting, how many units of B should be made if the company produces output to maximise throughput and profit?
I already have the number of hour to produce C but how to find its number of unit? Please help
Are you sure you have copied all the figures correctly, because if so they will not make any units of B !!
The throughput return per hour for each of the products is:
A: $850, B: $395; C: $1,940; D: $875
Therefore they will first make as many units of C as possible, which is 2,000. This will take 2,000 x 0.3 = 600 hours. They have 750 hours available and so they will use the remaining 150 hours making the next best which is D. As a result they will not make any units of B !!
Have you watched my free lectures on throughput accounting??