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Hi mike,
please help me with this,
Corries 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 8 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.
Conversion costs are 720 000 per dayProducts Selling price $per unit material cost $per unit throughput $per unit
X 150 70 80
120 40 80
Y
Z 300 100 … 200
I Didnt understand how to convert the units into hoursMike does not teach Paper F5 for us (and never has) !!!
For product X, the throughput return = $80 per unit.
They can produce 1,200 units per hour, and therefore each unit takes 1/1,200 hours = 0.00083333 hours
Therefore the return per factory hour = 80 / 0.00083333 = $96,000.
(Or, if you think about it, if they can produce 1,200 units in 1 hours, and if each of those units gives $80, then over 1 hours they will get a return of 1,200 x $80 = $96,000)
Same approach for Y and Z
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