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Free IIA-CIA-Part3 Exam Braindumps (page: 35)

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The following steps make up the stages of a theory of constraints (TOC) analysis.

I). Determine the most profitable product mix given the constraint.
II). Increase capacity at the constraint.
Ill). Identify the constraint.
IV). Redesign the manufacturing process.
V). Maximize the flow through the constraint.

If executed in the correct order, the sequence is

  1. III). I, II). V, IV
  2. III). II, I). V, IV
  3. III). II, I). IV, V
  4. III). I, V, II, IV

Answer(s): D

Explanation:

The steps in a TOC analysis are (1) identify the constraint. (2) determine the most profitable product mix given the constraint, (3) maximize the flow through the constraint, (4) increase capacity at the constraint, and (5) redesign the manufacturing process for greater flexibility and speed.



A manufacturer can sell its single product for US $660. Below are the cost data for the product:
Direct materials US$170
Direct labor 225
Manufacturing overhead 90
The relevant margin amount when beginning a theory of constraints (TOC) analysis is:

  1. US$490
  2. US$345
  3. US$265
  4. US$175

Answer(s): A

Explanation:

A theory of constraints (TOC) analysis proceeds from the assumption that only direct materials costs are truly variable in the short run. This is called throughput, or super variable, costing. The relevant margin amount is throughput margin, which equals price minus direct materials. Thus, the relevant margin amount for this manufacturer is US $490 (US $660-US $170).



Below are data concerning the hours spent by a manufacturer's two products in its two processes.


The constraint is:

  1. Product
  2. Product B in Assembly.
  3. The assembly activity.
  4. Cannot be determined from the information given.

Answer(s): C

Explanation:

In theory of constraints (TOC) analysis, the constraint (bottleneck) operation is the slowest part of the process. It can usually be identified as the one where work-in-process backs up the most of this manufacturer's two operations, the one that requires the most total time is assembly.



Data regarding four different products manufactured by an organization are presented as follows. Direct material and direct labor are readily available from the respective resource markets.
However, the manufacturer is limited to a maximum of 3,000 machine hours per month.


Units Produced per Machine Hour: A: 3 B: 4 C: 2 D: 3
The product that is the most profitable for the manufacturer in this situation is

  1. Product A
  2. Product B
  3. Product C
  4. Product D

Answer(s): B

Explanation:

Answer B is correct.
When resources are limited, maximum profits are achieved by maximizing the dollar contribution margin per limited or constraining factor. In this situation, machine hours are the constraining factor. Product B has a contribution margin per machine hour of US $28 [A x (US $18 - $11)], which is greater than that of Product A [3 x (US $15 - $7) = US $24], Product C [2 x (US $20 - $10) = US $20], or Product D [3 x (US $25 - $16) = US $27].






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