Table 5.1 A Company Makes Four Products That Have the Following Characteristics

question 108

Multiple Choice

Table 5.1
A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $15 of labor to produce; Product C sells for $100 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $75 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table.

Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions that follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product.
-Use the information in Table 5.1. Using the bottleneck method, what is the optimal product mix (consider variable costs only-overhead is not included in this profit calculation) ?

• A) 71 A, 80B, 80C, 80 D
• B) 80A, 72B, 80C, 80D
• C) 80A, 80B, 60C, 80D
• D) 80A, 80B, 80C, 70D

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Definitions:

Marginal Utility

The extra satisfaction or utility that an individual gains from consuming an additional unit of a good or service.

Price of Jam

The current market cost at which jam is sold, varying based on factors like quality, brand, and ingredients.

Price of Juice

The price of juice refers to the amount of money required to purchase a specific volume of juice, influenced by factors like production costs, brand, and market demand.

Indifference Curves

A visual chart that depicts various pairings of two products which deliver identical levels of contentment to a person.