The profit in product mix by using traditional contribution margin method needs to be determined. Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

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Answer 1

Question

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

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Yost-Perry Industries’ (YPI) senior management team wants to improve the profitability of the firm by accepting the right set of orders. Currently, decisions are made using the traditional method, which is to accept as much of the highest contribution margin product as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until all available capacity is utilized. Because the firm cannot satisfy all the demand, the product mix must be chosen carefully. Jay Perry, the newly promoted production supervisor, is knowledgeable about the TOC and the bottleneck-based method for scheduling. He believes that profitability can indeed be improved if bottleneck resourcesare exploited to determine the product mix. What is the change in profits if, instead of the traditional method that YPI has used thus far, the bottleneck method advocated by Jay is used for selecting the product mix?

The senior management at Best Products Company (BPC) is concerned with the existing capacity limitation, so they want to accept the mix of orders that maximizes the company’s profits. Traditionally, BPC has utilized a method whereby decisions are made to produce as much of the product with the highest contribution margin as possible (up to the limit of its demand), followed by the next highest contribution margin product, and so on until no more capacity is available. Because capacity is limited, choosing the proper product mix is crucial. Ali Ahmed, the newly hired production supervisor, is an avid follower of the theory of constraints philosophy and the bottleneck method for scheduling. He believes that profitability can indeed be approved if bottleneck resources are exploited to determine the product mix. What is the profit if the traditional contribution margin method is used for determining BPC’s product mix?

At Fraser engineering. Erix is trying to decide whether to purchase a certain part to to have it produced internally. Internal production could use either of two processes. One would entail a variable cost per unit of $17, and an annual fixed cost of $240,000. Three vendors are willing to provide the part. Vendor A has a price of $20 per-unit for any volume up to 30,000 units Vendor B has a price of $22 per-unit for demand of 1,000 units or less, and $18 per-unit for larger quantities. Vendor C offers a price of $21 per-unit for the first 1,000 units, and $19 for each additional unit. What is the correct formula to use to compare these options? Which options would be best for: I. 10,000 units? ii. 20,000 units? iii. 100,000 units? What is the value in considering these options across three very different demand values ranging from 10,000 to 100,000 units?

Answer 2

Question

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Expert Solution & Answer

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Answer 3

Question

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Expert Solution & Answer

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Answer 4

Question

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Expert Solution & Answer

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Answer 5

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Answer 6

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Answer 7

Chapter 5, Problem 8P

(A)

Summary Introduction

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Answer 8

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

Answer 9

B

Summary Introduction

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

Answer 10

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Answer 11

(C)

Summary Introduction

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

Ch. 5 - Take a process that you encounter on a daily...Ch. 5 - Prob. 2DQ Ch. 5 - How could the efficiency of the redesigned process...Ch. 5 - Billâ€™s Barbershop has two barbers available to...Ch. 5 - Melissaâ€™s Photo Studio offers both individual...Ch. 5 - Figure 5.11 details the process flow for two types...Ch. 5 - Prob. 4P Ch. 5 - Super Fun Industries manufactures four top-selling...Ch. 5 - Prob. 6P Ch. 5 - Yost-Perry Industries (YPI) manufactures a mix of...

The profit in product mix by using traditional contribution margin method needs to be determined. Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Solution Summary: The author explains how the profit (using bottleneck method) for select a product mix needs to be determined.

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Want to see the full answer?

Chapter 5 Solutions

The profit in product mix by using traditional contribution margin method needs to be determined. Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Solution Summary: The author explains how the profit (using bottleneck method) for select a product mix needs to be determined.

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined. Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined. Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

Interpretation: The profit gain in value and in percentage needs to be determined. Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Want to see the full answer?

Chapter 5 Solutions

Interpretation: The profit in product mix by using traditional contribution margin method needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.

Interpretation: The profit (using bottleneck method) for select a product mix needs to be determined.

Concept Introduction: In a product mix, each bottleneck considers as a decision maker. It is a constraint which limits the ability to meet market demand

Interpretation: The profit gain in value and in percentage needs to be determined.

Concept Introduction: Contribution margin is concerned with preparing income statement. Generally for calculating profit or loss in business it is required.