- This topic has 3 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
Hello Sir can you help me with this question please. The answer is fourth but i cannot understand why. it is from Bpp practice and revision kit
A manufacturing company uses machine C, which is operational for five hours a day to manufacture four products: W, X, Y, and Z. Factory costs are $150,000 per day. The company uses throughput accounting and its objective is to maximize profits. Information relating to these products is as follows:
Product Production rate per machine hours (units) Selling price per unit ($) Material cost per unit ($) Conversion cost per unit ($)
W 200 350 120 40
X 500 190 95 25
Y 400 270 160 20
Z 350 215 75 35If the company is not able to increase the availability of machine C’s operational hours, what is the production ranking of product Y?
As the products are all produced in the same factory the cost per machine hour will be the same across all the products so they can be ranked on their throughput return per machine hour (otherwise they should be ranked on their throughput accounting ratio).
Prod W
Prod rate ph. 200
Throughput pu 230
Throughput ph 46000Prod X
Prod rate ph. 500
Throughput pu 95
Throughput ph 47500Prod Y
Prod rate ph. 400
Throughput pu 110
Throughput ph 44000Prod Z
Prod rate ph. 350
Throughput pu 140
Throughput ph 49000Rank then in order of throughput ph
46000. 47500. 44000. 49000
W. X. Y. Z
3rd. 2nd. 4th. 1st
- You must be logged in to reply to this topic.