Question

44. In the theory of constraints, throughput is defined as:

            A) total manufacturing costs.

            B)   sales less direct labor costs.

            C)   sales less direct material costs.

            D) sales less direct labor and material costs.

            E)   sales less processing costs.

.

47. Which one of the following is not one of the five steps in TOC analysis?

            A) Identify the binding constraint(s).

            B)   Determine the most efficient utilization for each binding constraint.

            C)   Manage the flow through the binding constraint.

            D) Deduct capacity from the binding constraint.

            E)   Redesign the manufacturing process for flexibility and fast throughput.

48. A system for balancing the flow of production through a binding constraint, thereby reducing the amount of inventory at the constraint and improving overall productivity is a:

            A) Drum-buffer-rope system.

            B)   Just-in-time system.

            C)   Theory of constraints system.

            D) Activity based costing system.

            E)   Total quality management system.

50 and 51 use the following information:

TEB, Inc., which manufactures video games, consists of two divisions, each operating as a profit center. Division A makes a component that is needed by Division B; however, if the price from Division A is too high, Division B has indicated it would purchase the component from an outside supplier. Additional information related to the divisions is:

Division B’s annual needs for component                                          10,000 units

Division A’s capacity                                                                          40,000 units

Division A’s current sales at $170 per unit                                         30,000 units

Division As total cost per unit ($140 variable and $10 fixed)            $150

Division A’s annual fixed cost                                                           $1,500,000

Price per unit to buy from outside supplier                                         $160

Assume Division A has an offer from a foreign buyer to purchase 10,000 units at $150 per unit. Assume the company management (Vice-President above the two divisions) wants Division A to supply/transfer 10,000 units to Division B.

50. The most logical minimum acceptable transfer price is __________?

51. The most logical maximum acceptable transfer price is __________?

Answer 1

Question 44.

Solution:

Throughput = Sales - TVC(total variable cost)

generally, throughput = Sales - Direct material costs

Thus, answer is option C.