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IMANET Exam CMA Topic 3 Question 59 Discussion
Topic #: 3
Rosecrans Manufacturing produces kerosene lanterns. The Company can sell all of its output. Each unit sells for $120,and direct materials costing $48 per unit are added at the start of the frit operation. Other variable caste are immaterial. Production data for one of one of its products is presented below:
Rosecrans hires additional workers at a cost of $500,000 per year to expedite setups and materials handling in the bottleneck operation .As a result, the annual output of the bottleneck operation increases by 500 units. The Change in operating income Attributable to the increase in workers is
Decentralization results in greater speed in making operating decisions because they are made by lower-level managers instead of being referred to top management. The quality of operating decisions should also be enhanced, assuming proper training of managers, because those closest to the problems should be the most knowledgeable about them.
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