ch12-AFM102s2012

Managerial accounting 12 38 utilization of a

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Unformatted text preview: ilization of a Constrained Resource Machine A1 is the constrained resource and is Machine A1 is the constrained resource and is being used at 100% of its capacity. being used at 100% of its capacity. There is excess capacity on all other There is excess capacity on all other machines. machines. Machine A1 has a capacity of 2,400 minutes Machine A1 has a capacity of 2,400 minutes per week. per week. Should Ensign focus its efforts on Should Ensign focus its efforts on Product 1 or Product 2? Product 1 or Product 2? Managerial Accounting 12-40 Utilization of a Constrained Resource The key is the contribution margin per unit of the constrained resource. Product 2 should be emphasized. IIff there are no other considerations, the best plan would If there are no other considerations, the best plan would If be to produce to meet current demand for Product 2 and be to produce to meet current demand for Product 2 and then use remaining capacity to make Product 1. tthen use remaining capacity to make Product 1. then hen Managerial Accounting 12-41 Utilization of a Constrained Resource Let’s see how this plan would work. Allocating Our Constrained Resource...
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This test prep was uploaded on 04/09/2014 for the course AFM 102 at Waterloo.

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