1. Which production factor is a bottleneck? What is the normal capacity utilization for this company? 2. Calculate the cost per product.
1. Which production factor is a bottleneck? What is the normal capacity utilization for this company? 2. Calculate the cost per product.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:9-24 Capacity management. The following information is available concerning a one-product company:
■ Sales: 10,000 units a year.
■ The machine complex can operate a maximum of 8 hours a day.
■ The company can operate a maximum of 250 days a year.
■ The maximum production per day is 24 units.
■ The company is capable of processing 2,000 kg of raw material a year. One kg of raw material yields
two finished products.
■ One worker produces one product per hour. A maximum of six workers can be employed. The working
time per day is 8 hours. The normal capacity utilization is 100% of maximum capacity.
1. Which production factor is a bottleneck? What is the normal capacity utilization for this company?
2. Calculate the cost per product.
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