Tthen use remaining capacity to make product 1 then

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Unformatted text preview: (Machine A1) Weekly demand for Product 2 Time required per unit Total time required to make Product 2 Total time available Time used to make Product 2 Time available for Product 1 Time required per unit Production of Product 1 Managerial Accounting × 2,200 units 0.50 m in. 1,100 m in. ÷ 2,400 1,100 1,300 1.00 1,300 m in. m in. m in. m in. units 12-42 Utilization of a Constrained Resource According to the plan, we will produce 2,200 units of Product 2 and 1,300 of Product 1. Our contribution margin looks like this. Production and sales (units) Contribution margin per unit Total contribution margin Product 1 1,300 $ 24 $ 31,200 Product 2 2,200 $ 15 $ 33,000 The total contribution margin for Ensign is $64,200. The Managerial Accounting 12-43 Utilization of a Constrained Resource Could be caused by short-term constraints on production inputs (labour, machine hours, etc.) Contribution per unit of output no longer appropriate Calculate contribution per unit of the scarce resource (labour hours, machine hours, etc.) Managerial Accounting 12-44 Managing Constraints “Theory of C...
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This test prep was uploaded on 04/09/2014 for the course AFM 102 at Waterloo.

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