Data for a Factory -
the Theory of Constraints Has Its Own Special Definitions

question 17

Multiple Choice

Data for a factory
$\begin{array}{ll}\text { Total factory cost } & £ 10,000 \\\text { Total time au ailable on key resource (hours) } & 2,500 \\\text { Contribution per unit product A } & £ 34.00 \\\text { Contribution per unit product B } & £ 30.00 \\\text { Contribution per unit product C } & £ 22.00 \\\text { Contribution per unit product D } & £ 20.00 \\\text { Hours required product A } & 12.0 \\\text { Hours required product B } & 6.0 \\\text { Hours required product C } & 6.0 \\\text { Hours required product D } & 8.0\end{array}$

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The theory of constraints has its own special definitions

• A)Inventory = stock - machines and buildings
• B)Inventory = stock
• C)Inventory = stock + WIP
• D)Inventory = stock + machines and buildings

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Definitions:

Profit Center

A subunit of the firm with the decision rights over prices and manufacturing processes to maximize profit. Profit centers are evaluated on meeting target profits and are composed of several cost centers.

Responsibility Centers

Units or departments within an organization whose managers are accountable for specific financial operations and performance.

Decision Rights

The duties that a particular individual in an organization is expected to perform.

Performance Evaluation

This involves assessing an employee's job performance using various criteria to determine the effectiveness and efficiency of their work.