Table 5.2 A Company Makes Four Products That Have the Following Characteristics

question 8

Multiple Choice

Table 5.2
A company makes four products that have the following characteristics: Product A sells for $75 but needs $20 of materials and $20 of labor to produce; Product B sells for $90 but needs $45 of materials and $20 of labor to produce; Product C sells for $110 but needs $50 of materials and $30 of labor to produce; Product D sells for $135 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 is 50 As, 60 Bs, 70 Cs, and 80 Ds 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 5.2. Using the bottleneck method, which product should be scheduled first?

• A) Product A
• B) Product B
• C) Product C
• D) Product D

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Definitions:

Money Paid Out

The total amount of money a company or individual spends or disburses.

Average Collection Period

The average number of days it takes for a company to receive payment after a sale has been made on credit.

Accounts Receivables

Money owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.

Cost of Goods Sold

Represents the direct costs attributable to the production of goods sold in a company, including the cost of the materials and labor used to create the product.