Four products are manufactured by MNO: $$\begin{array} { | l | r | r | r | r | }
\hline & \text { Maxi } & \text { Midi } & \text { Mini } & \text { Micro } \
\hline \text { Selling price per unit } & 600 & 400 & 300 & 250 \
\hline \text { Variable labour costs per unit (\$40/hour) } & 250 & 120 & 140 & 90 \
\hline \text { Variable material costs per unit } & 275 & 250 & 100 & 110 \
\hline
\end{array}$$
-Applying the theory of constraints and a throughput accounting approach, and assuming labour to be the bottleneck constraint, the ranking order of products for MNO to maximise its profitability within the labour constraint is:
A) Maxi, Midi, Mini, Micro
B) Maxi, Mini, Micro, Midi
C) Micro, Mini, Maxi, Midi
D) Micro, Midi, Maxi, Mini

Question

Four products are manufactured by MNO: $$\begin{array} { | l | r | r | r | r | } 
\hline & \text { Maxi } & \text { Midi } & \text { Mini } & \text { Micro } \
\hline \text { Selling price per unit } & 600 & 400 & 300 & 250 \
\hline \text { Variable labour costs per unit (\$40/hour) } & 250 & 120 & 140 & 90 \
\hline \text { Variable material costs per unit } & 275 & 250 & 100 & 110 \
\hline
\end{array}$$
-Applying the theory of constraints and a throughput accounting approach, and assuming labour to be the bottleneck constraint, the ranking order of products for MNO to maximise its profitability within the labour constraint is:
A) Maxi, Midi, Mini, Micro
B) Maxi, Mini, Micro, Midi
C) Micro, Mini, Maxi, Midi
D) Micro, Midi, Maxi, Mini

Quizplus · Accepted Answer

\[\begin{array} { | l | r | r | r | r | } 
\hline & \text { Maxi } & \text { Midi } & \text { Mini } & \text { Micro } \
\hline \text { Selling price per unit } & 600 & 400 & 300 & 250 \
\hline \text { Variable labour costs per unit (\$40/hour) } & 250 & 120 & 140 & 90 \
\hline \text { Variable material costs per unit } & 275 & 250 & 100 & 110 \
\hline \text { Contribution per unit } & 75 & 30 & 60 & 50 \
\hline \text { Production hours } & 2 & 2 & 2 & 2 \
\hline \text { Contribution per production hour } & 37.50 & 15.00 & 30.00 & 25.00 \
\hline \text { Ranking } & 1 & 4 & 2 & 3 \
\hline & & & & \
\hline \text { Selling price per unit } & \text { Maxi } & \text { Midi } & \text { Mini } & \text { Micro } \
\hline \text { Variable material costs per unit } & 600 & 400 & 300 & 250 \
\hline \text { Throughput contribution } & 275 & 250 & 100 & 110 \
\hline \text { Labourhours @ \$40/hour } & 325 & 150 & 200 & 140 \
\hline \text { Contribution per labour hour } & 6.25 & 3.00 & 3.50 & 2.25 \
\hline \text { Ranking } & 52.00 & 50.00 & 57.14 & 62.22 \
\hline
\end{array}\]

Four Products Are Manufactured by MNO -Applying the Theory of Constraints and a Throughput Accounting Approach