CMA Study Group

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  • 1.  THEORIES OF CONSTRAINT

    Posted 22 days ago
    A manufacturer has a limited supply of 1,200 lbs of raw materials that can be used to produce either Product X or Y, details of which are given below.
    Product X
    Product Y
    Selling price per unit
    $200
    $250
    Variable costs per unit
    $176
    $200
    Raw materials used per unit
    8 lbs
    10 lbs
    Which one of the following should the manufacturer produce in order to maximize contribution margin?



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    TIMUCIN ONER
    Director/Manager
    ANTALYA
    Turkey
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  • 2.  RE: THEORIES OF CONSTRAINT

    Posted 21 days ago
    选D

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    Xulong Wang
    Student
    Baoji
    China
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  • 3.  RE: THEORIES OF CONSTRAINT

    Posted 21 days ago
    Hi,
    The answer will be D.. 120 units of product Y only.

    Here we need to find the contribution margin as well as the contribution margin per limiting factor.

    Here the limiting factor is qty (lbs) of materials.

    Now for product X and Y,  the CM per LF.

    X = 200 - 176 =24
    Y = 250- 200 =50
    Limiting factor
    for X = 1200/8 =150 units
    For Y = 1200/10 =120 units

    So CM per LF for

    X = 24/150 = 0.16
    Y = 50/120 =0.42

    So it's evident that CM per LF is more for product Y. So we need to produce entire units of Y.

    Now we need to check how many units are remaining after production of X

    Here for Y no of units is 120 and RM required per unit is 10 so total units produced is 1200 lbs.

    Required units is 1200 lbs only. So no need to  produce Product X.






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    VIMAL RAJ CHAKKINGAL
    Student
    PALAKKAD
    India
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  • 4.  RE: THEORIES OF CONSTRAINT

    Posted 21 days ago
    Thank you Vimal. The answer is easier than I expected..I got it.
    Thanks a lot

    ------------------------------
    TIMUCIN ONER
    Director/Manager
    ANTALYA
    Turkey
    ------------------------------



  • 5.  RE: THEORIES OF CONSTRAINT

    Posted 21 days ago
    Hi,
    I think it's option D.

    X Y
    Contribution/Unit 24 50
    Contribution/lbs 3 5
    Then Trial and Error for each options,
    Total Contribution for each option;
    A 3600
    B 4400
    C -
    D 6000 (max)


    Let me know the correct answer please.

    - Swarup