# CMA Study Group

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## THEORIES OF CONSTRAINT #### TIMUCIN ONER22 days ago #### Xulong Wang21 days ago #### VIMAL RAJ CHAKKINGAL21 days ago #### TIMUCIN ONER21 days ago • #### 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?
 A. 150 units of Product X. B. 100 units of Product X and 40 units of Product Y. C. 100 units of Product X and 80 units of Product Y. D. 120 units of Product Y.

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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
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

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TIMUCIN ONER
Director/Manager
ANTALYA
Turkey
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• #### 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)