The Operations Manager for the Blue Moon Brewing Co

question 59

Multiple Choice

The operations manager for the Blue Moon Brewing Co.produces two beers: Lite (L) and Dark (D) .Two of his resources are constrained: production time,which is limited to 8 hours (480 minutes) per day; and malt extract (one of his ingredients) ,of which he can get only 675 gallons each day.To produce a keg of Lite beer requires 2 minutes of time and 5 gallons of malt extract,while each keg of Dark beer needs 4 minutes of time and 3 gallons of malt extract.Profits for Lite beer are $3.00 per keg,and profits for Dark beer are $2.00 per keg.For the production combination of 135 Lite and 0 Dark,which resource is "slack" (not fully used) ?

• A)Time (only)
• B)Malt extract (only)
• C)Both time and malt extract
• D)Neither time nor malt extract
• E)Cannot be determined exactly

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Definitions:

Cost of Goods Sold

The costs directly linked to the manufacturing of products a company sells, which include both materials and labor.

First-In First-Out

An inventory valuation method where the first items produced or acquired are the first to be sold or used.

Temporal Method

A method for currency translation that uses exchange rates based on the time assets and liabilities were acquired or incurred.

Lower of Cost

An accounting principle where the inventory is recorded at the lower of its historical cost or market value.