RelyaTech Corporation manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their selling price gross margin contribution margin per unit of the constrained resource contribution margin

RelyaTech Corporation manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their selling price gross margin contribution margin per unit of the constrained resource contribution margin

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 21E: For the theory of constraints, which of the following determines the production rate of the plant?...

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Steele Industries manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their: gross margin O contribution margin O selling price O contribution margin per unit of the constrained resource
A firm produces several product lines through semi-customized orders. The firm incurs significant SG&A costs. Which of the following is TRUE about this firm, given only the above information? a. This firm is likely to get the same product cost numbers using activity-based costing or job- order costing. b.This firm will be more profitable if it uses activity-based costing. c. This firm is likely to get different product cost numbers using activity-based costing compared to job-order costing. d.This firm will not be more profitable if it uses activity-based costing.
If the incremental cost of producing an item in the short run is less than the outsourcing price, the firm should consider producing it in-house. Select one: True O False
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Cordova manufactures three types of stained glass windows, cleverly named Products A, B, and C. Information about these products follows: Sales price Variable costs per unit Fixed costs per unit Required number of labor hours Product A Product B Product C Product A $50.00 16.40 6.00 2.00 15,000 units 10,000 units 6,000 units Product B $ 60.00 11.25 6.00 2.50 Cordova currently is limited to 60,000 labor hours per month. Cordova's marketing department has determined the following demand t for its products: Product C $ 90.00 24.40 6.00 4.00
When constrained by a limiting resource, managers often seek to produce those products which have: a)The highest selling prices. b)The lowest average cost per unit. c)The highest contribution margin ratios. d)The highest contribution margin per unit of limiting resource.
The management of Hartman Company is trying to determine the amount of each of two products to produce over the coming planning period. The following information concerns labor availability, labor utilization, and product profitability: a. Develop a linear programming model of the Hartman Company problem. Solve the model to determine the optimal production quantities of products 1 and 2. b. In computing the profit contribution per unit, management does not deduct labor costs because they are considered fixed for the upcoming planning period. However, suppose that overtime can be scheduled in some of the departments. Which departments would you recommend scheduling for overtime? How much would you be willing to pay per hour of overtime in each department? c. Suppose that 10, 6, and 8 hours of overtime may be scheduled in departments A, B, and C, respectively. The cost per hour of overtime is 18 in department A, 22.50 in department B, and 12 in department C. Formulate a linear programming model that can be used to determine the optimal production quantities if overtime is made available. What are the optimal production quantities, and what is the revised total contribution to profit? How much overtime do you recommend using in each department? What is the increase in the total contribution to profit if overtime is used?
For the theory of constraints, which of the following determines the production rate of the plant? a. Local efficiency measures that encourage production of excess inventory just in case demand is greater than expected b. The economic order quantity c. Market demand d. The drummer constraints production rate
Morrisons Plastics Division, a profit center, sells its products to external customers as well as to other internal profit centers. Which one of the following circumstances would justify the Plastics Division selling a product internally to another profit center at a price that is below the market-based transfer price? a. The buying unit has excess capacity. b. The selling unit is operating at full capacity. c. Routine sales commissions and collection costs would be avoided. d. The profit centers managers are evaluated on the basis of unit operating income.
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When operating in a constrained environment, which products should be produced? A. products with the highest contribution margin per unit B. products with the highest contribution margin per unit of the constrained process C. products with the highest selling price D. products with the lowest allocated joint cost
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