As Products Are Made,capacity Is Used Up

question 22

Essay

As products are made,capacity is used up.Managers must allocate the constrained resource to products so as to maximize the company's contribution margin.
Required:
a.List three limited resources that can constrain business operations.
b.How should managers determine the best way to allocate constrained resources among products or operations?
Unit 8-4,

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Definitions:

Machine-Hours

A measure of the total time that machines are operated within a specific period, used for allocating manufacturing overhead costs to products.

Manufacturing Overhead

The indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of maintenance, electricity, and equipment depreciation.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products, calculated before the start of a period.

Machine-Hours

A measure of production output or activity based on the total hours that machines are operating.