Consider the Most Constrained Resource You Have: Your Time

question 81

Short Answer

Consider the most constrained resource you have: Your time. The bottleneck is 24 hours (the amount you - and everyone else - has in any given day). After considering time spent sleeping, eating, and working, you are left with eight hours per week of extra time, which you may spend studying for the CPA exam or playing the piano.
As a CPA, your potential earnings per hour are $125.00, while as a pianist your potential earnings per hour are $55.00. The variable cost per direct labor hour of your time is $25.00. a. Based on the data in the table above, how many hours should you spend studying each week? (Pretend the available hours are consecutive hours.)
b. You find you retain less information the longer you study, such that the variable cost of each hour of studying actually doubles with each additional hour spent studying. Given this new information, how many hours should you spend studying each week? (Pretend the available hours are consecutive hours.)

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Definitions:

Merchandise

Goods that are bought and sold by businesses in the ordinary course of commerce.

General Journal Entries

Records of financial transactions where each entry is recorded in a double-entry accounting system, impacting at least two accounts.

Terms 2/10, N/30

Terms 2/10, N/30 are payment terms indicating that a buyer can take a 2% discount on the invoice price if the payment is made within 10 days; otherwise, the net amount is due within 30 days.