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      Question

      A plant has one binding bottleneck: a heat-treating oven

      (hours limited). Product P and Q both consume oven time; material is the only truly variable cost in the short run. P has higher gross margin per unit, but lower throughput per bottleneck hour than Q. Demand for both exceeds capacity; fixed costs are committed. Which production plan maximizes short-run profit?
      A Prioritize P because its unit margin is higher. Correct Answer Incorrect Answer
      B Prioritize Q because throughput per bottleneck hour is higher. Correct Answer Incorrect Answer
      C Split capacity 50:50 to diversify risk. Correct Answer Incorrect Answer
      D Produce to equal contribution per unit of material. Correct Answer Incorrect Answer
      E Shift to the product with lower setup times regardless of throughput. Correct Answer Incorrect Answer

      Solution

      In throughput accounting with a single binding bottleneck, rank products by throughput per bottleneck hour (sales – truly variable costs per hour). With excess demand and fixed costs committed, prioritize Q if it yields higher throughput per constrained hour.

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