Answer (B) is correct . 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 supervariable, costing. The relevant margin amount is throughput margin, which equals price minus direct materials. Thus, margin figures of interest to Bombastic Bathrooms are $150 for brass ($250 – $100), $130 for chrome ($220 – $90), $180 for nickel ($375 – $195), and $190 for aluminum ($400 – $210).
Answer (A) is incorrect because The amounts of $150, $115, $260, and $265 result from subtracting conversion costs, rather than supervariable costs, from selling price.
Answer (C) is incorrect because The amounts of $80, $60, $110, and $120 result from subtracting prime costs, rather than supervariable costs, from selling price.
Answer (D) is incorrect because The amounts of $50, $25, $65, and $55 result from subtracting full manufacturing costs, rather than supervariable costs, from selling price.
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