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A company produces three products D, E and F. The statement below shows the selling price and product costs per unit for each product, based on a traditional absorption costing system.
Each of the products is produced using Process A which has a maximum capacity of 2,500 hours per period.
If a throughput accounting approach is used, the ranking of products, in order of priority, for the profit maximizing product mix will be:
Suggested Answer: C
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12 comments · newest first
VE
Verdell
3 days ago
I'm leaning towards C) F, D, E. F might surprise us with throughput.
EZ
Ezekiel
8 days ago
I feel like A) D, E, F could work too. D has solid numbers.
AV
Avery
13 days ago
I think it's B) E, D, F. E has the highest contribution margin.
GR
Graham
18 days ago
Absorption costing can really skew priorities sometimes.
MO
Moon
23 days ago
Wait, are we sure about this ranking? Seems off.
LI
Linwood
29 days ago
Definitely F first, it has the best throughput!
PA
Paris
1 month ago
I think E should be prioritized over D.
SH
Shaniqua
1 month ago
Product D has the highest contribution margin per hour.
DA
Darrin
1 month ago
I think the answer might be B, E, D, F, but I’m not confident. I remember something about prioritizing based on the highest throughput.
JA
Jacinta
2 months ago
I feel like product D had the highest contribution margin in our last exercise, but I can't recall the exact numbers for E and F.
SA
Santos
2 months ago
I'm not entirely sure, but I think we did a practice question where we had to rank products based on their contribution margins. I wonder if that's similar here?
DI
Dick
2 months ago
I remember we discussed throughput accounting and how it focuses on contribution per hour. I think that might help with this question.