Theory of Constraint - Managerial Accounting

The video tutorial explains decision-making in manufacturing using the theory of constraints. It highlights the importance of maximizing contribution margin per unit of constrained resource. An example scenario is provided where a company must fulfill product orders with limited machine hours. The tutorial guides viewers through calculating contribution margins and determining the optimal production order to efficiently use resources and meet customer demand.

What is the theory of constraint and how does it relate to decision making in manufacturing companies?

Explain the importance of not overproducing products in relation to customer demand.

How should a company prioritize production when faced with limited resources?

Calculate the contribution margin per unit for small, medium, and large products based on the given sales prices and variable costs.

What is the contribution margin per machine hour for each product size?

Describe the process of fulfilling customer orders when machine hours are constrained.

How many units of each product can be produced given the constraints and customer orders?