Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed


Customer complaints, on-time delivery rate and delivery delays. 20.7



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20.6
Customer complaints, on-time delivery rate and delivery delays.
20.7
Process yields, defects per product line and employee turnover.
20.8
Two reasons why lines, queues and delays occur are (1) uncertainty about when customers will order products or services – uncertainty causes a number of orders to be received at the same time causing delays and (2) limited capacity and bottlenecks – a bottleneck is an operation where the work required to be performed approaches or exceeds the available capacity.
20.9
No. Adding a product when capacity is constrained and the timing of customer orders is uncertain causes delays in delivering all existing products. If the revenue losses from delays in delivering existing products and the increase in carrying costs of the existing products exceed the positive contribution earned by the product that was added, then it is not worthwhile to make and sell the new product, despite its positive contribution margin. Chapter 20 describes the negative effects (negative externalities) that one product can have on others when products share common manufacturing facilities.
20.10
The three main measures used in the theory of constraints are
1
Throughput contribution equal to sales revenues minus direct materials costs.
2
Investments (stock) equal to the sum of materials costs of direct materials stock, work-in-progress stock and finished goods stock, research and development costs, and costs of equipment and buildings.
3
Other operating costs equal to all operating costs (other than direct materials) incurred to earn throughput contribution.


Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012

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