The Same Constrained Resource Is Used by Four Different Products

question 51

Multiple Choice

The same constrained resource is used by four different products at Debruin Corporation. Data concerning those products appear below:
The company does not have enough of the constrained resource to satisfy for demand of all four products. From the standpoint of the entire company, if it is a choice between sales of one unit of one product versus another, which product should the salespersons emphasize?

• A) R400
• B) R300
• C) R100
• D) R200

---

Definitions:

Direct Write-off Method

A method of accounting for bad debts that involves charging unpaid invoices directly to the expense account at the time they are determined to be uncollectable.

Expense

Outflows or other using up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.

Asset

Resources owned by a company that are expected to provide future economic benefits, including tangible and intangible items like property, equipment, and trademarks.

Allowance for Doubtful Accounts

An estimate of the amount of accounts receivable that a company does not expect to collect, treated as a contra-asset account.