Consider a capacity constrained process producing a high profit margin product. What will the impacts on...

Consider a capacity constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?

A)No impact on revenue or profits

B)Higher revenue and profits

C)Lower revenue and profits

D)Higher profits with no change in revenue

Expert Solution

Higher revenue and profits Because here we are reducing bottleneck activity time by 10% so the activity which was taking much time that we reduce. It will directly create an impact on revenue and profit. Efficiency will increase so more revenue will generate.

Amanda K answered 2 years ago

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Category Prior Year Current YearAccounts payable ??? ???Accounts receivable 320,715 397,400Accruals 40,500 33,750Additional paid in capital 500,000 541,650Cash 17,500 47,500Common Stock 94,000 105,000COGS 328,500 428,048.00Current portion long-term debt 33,750 35,000Depreciation expense 54,000 54,731.00Interest expense 40,500 41,017.00Inventories 279,000 288,000Long-term debt 339,670.00 401,877.00Net fixed assets 946,535 999,000Notes payable 148,500 162,000Operating expenses (excl. depr.) 126,000 161,905.00Retained earnings 306,000 342,000Sales 639,000 850,323.00Taxes 24,750 48,686.00What is the firm's current year gross profit margin?

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