Clang Co. produces and sells three products (X, Y, and Z). The following data re

Question

Clang Co. produces and sells three products (X, Y, and Z). The following data relate to the three products. Labor is the constraint.

The throughput margin per labor minute for Product Y is calculated to be:

A) $3.00

B) $3.04

C) $3.48

D) $4.06

E) $6.00

According to the theory of constraints, which product should be produced first?

A) Product X

B) Product Y

C) Product Z

D) more than one of the products have equal profitability.

E) there isn't enough information to answer the question.

XYZ 2 160 150 140 $ 130 $ 160 $ 150 Raw mateials cost per t 65 80 $ 90 20 Demandin nits Sengprice perit Labor tine in minlesper unit 16 23

Explanation / Answer

1)

correct option is " C" - 3.48

2)product X should be manufactured first as it generates highest contribution per constraint resource .

correct option is "A"

X Y Z Selling price 130 160 150 Raw material cost per unit (65) (80) (90) contribution margin 65 80 60 labor time per unit 16 23 20 contribution margin per labor time 65/16=4.06 3.48 3 Ranking 1 2 3

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