In Attempting to Improve Profitability When Faced with a Bottleneck

question 7

Multiple Choice

In attempting to improve profitability when faced with a bottleneck related to hours that is involved in the production of two or more products, which of the following is most important for management to consider?

• A) Contribution margin per unit for each product
• B) Time required for each different product passing through the bottleneck
• C) Selling price or sales revenue generated by each product produced through the bottleneck
• D) Contribution margin per bottleneck hour for each product

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Definitions:

Accounting Period

A specified duration of time used for financial reporting and analysis purposes, such as a fiscal quarter or year, over which financial results are calculated and reported.

Recurring Transactions

Transactions that occur regularly, such as monthly subscriptions or utility payments, which can be automated in accounting software.

Adjusting Entries

Bookkeeping records created at the closure of an accounting cycle to distribute revenues and expenses to the timeframe in which they were genuinely incurred.

Onscreen Journal

A digital ledger within accounting software that displays financial transactions in chronological order.