The Use of Theory of Constraints (TOC) Differs from Traditional

question 94

Multiple Choice

The use of theory of constraints (TOC) differs from traditional decision making because it:

• A) examines the resource's utilization rather than the cost of a product
• B) recognizes that the individual resources that limit business performance are difficult to find and manage
• C) places greater emphasis on timing than cost in adjusting resources that are limiting business performance
• D) provides a way to analyze the operating cost of a resource that is easier to use than traditional accounting methods

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Definitions:

Direct Materials Budget

A detailed plan showing the amount of raw materials that must be purchased to fulfill the production budget and to provide for adequate inventories.

Production Budget

An estimate of the total amount of production, often expressed in units, that a company plans to manufacture during a specific period.

Finished Goods Inventory

The stock of completed products that are ready to be sold but are still in the company's inventory.

Selling And Administrative Budget

Forecasts expected expenses related to selling the product and managing the business, excluding manufacturing costs.