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A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $25 of labor to produce; Product C sells for $120 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $80 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. Processing Time (min/unit) Work Center A B C D W 6 1 3 12 X 9 10 4 8 Y 4 3 12 9 Z 10 ΤΟ 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions the follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Using the bottleneck method, what is the profit if the company manufactures the optimal product mix (consider variable costs only-overhead is not included in this profit calculation)? A) less than or equal to $7,900 B) greater than $7,900 but less than or equal to $8,100 C) greater than $8,100 but less than or equal to $8,300 D) greater than $8,300 but less than or equal to $8,500 E) greater than $8,500

A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $25 of labor to produce; Product C sells for $120 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $80 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. Processing Time (min/unit) Work Center A B C D W 6 1 3 12 X 9 10 4 8 Y 4 3 12 9 Z 10 ΤΟ 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions the follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Using the bottleneck method, what is the profit if the company manufactures the optimal product mix (consider variable costs only-overhead is not included in this profit calculation)? A) less than or equal to $7,900 B) greater than $7,900 but less than or equal to $8,100 C) greater than $8,100 but less than or equal to $8,300 D) greater than $8,300 but less than or equal to $8,500 E) greater than $8,500

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter11: Simulation Models
Section: Chapter Questions
Problem 54P
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A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $25 of labor to produce; Product C sells for $120 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $80 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. Processing Time (min/unit) Work Center A B C D W 6 1 3 12 X 9 10 4 8 Y 4 3 12 9 Z 10 ΤΟ 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions the follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Using the bottleneck method, what is the profit if the company manufactures the optimal product mix (consider variable costs only-overhead is not included in this profit calculation)? A) less than or equal to $7,900 B) greater than $7,900 but less than or equal to $8,100 C) greater than $8,100 but less than or equal to $8,300 D) greater than $8,300 but less than or equal to $8,500 E) greater than $8,500
Transcribed Image Text:A company makes four products that have the following characteristics: Product A sells for $50 but needs $10 of materials and $15 of labor to produce; Product B sells for $75 but needs $30 of materials and $25 of labor to produce; Product C sells for $120 but needs $50 of materials and $30 of labor to produce; Product D sells for $150 but needs $80 of materials and $40 of labor to produce. The processing requirements for each product on each of the four machines are shown in the table. Processing Time (min/unit) Work Center A B C D W 6 1 3 12 X 9 10 4 8 Y 4 3 12 9 Z 10 ΤΟ 7 11 Work centers W, X, Y, and Z are available for 40 hours per week and have no setup time when switching between products. Market demand for each product is 80 units per week. In the questions the follow, the traditional method refers to maximizing the contribution margin per unit for each product, and the bottleneck method refers to maximizing the contribution margin per minute at the bottleneck for each product. Using the bottleneck method, what is the profit if the company manufactures the optimal product mix (consider variable costs only-overhead is not included in this profit calculation)? A) less than or equal to $7,900 B) greater than $7,900 but less than or equal to $8,100 C) greater than $8,100 but less than or equal to $8,300 D) greater than $8,300 but less than or equal to $8,500 E) greater than $8,500
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