Calculate the throughput accounting ratio for each product

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Reference no: EM134007327

Problem

Jasmine Sdn. Bhd. produces three products, Alpha, Beta and Gamma, which passes through three production processes. The following table relates to the standard time taken to make each product in each process: Alpha (hours) Beta (hours) Gamma (hours) Process M 1.5 1 1.5 Process N 2.5 2 2.5 Process O 2 1.5 1.5 The total hours available for Process M are 2,500 hours, Process N is 3,500 hours and Process O is 3,000 hours per month. Sales demand restricts the output of Alpha, Beta and Gamma to 700, 600 and 800 per month, respectively. The total estimated factory costs per month are RM62,500. The cost and revenue for each unit of each product are: Alpha Beta Gamma Direct materials 15 15 25 Direct labour 17 12 18 Variable overhead 8 6 8 Fixed costs 8 6 8 Total costs 48 39 59 Selling price 80 70 96

Task

1. Identify the bottleneck activity with justification.
2. Calculate the throughput accounting ratio for each product.
3. Determine the optimum production plan that would maximise the company's throughput contribution.
4. Calculate the profit earned per month based on your production plan in part (3).

Reference no: EM134007327

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