Limiting Factors ECR Help!!

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:32AM in AAT student discussion
I dont seem to be able to work out an answer for limiting factors relating to ECR.
Lets say I have a budget of a certain amount of materials and lets say have M as materials per unit and L as labour per unit.
I deduct them from the selling price to come up with the contribution.
I divide the contribution by M to get the contribution per M unit. That should give me my production order right? Am I missing something on the limiting factor?
Would appreciate any advice as my head is stuck on it.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Limiting Factors ECR Help!!

    That sounds about right to me. I've a brief outline of limiting factors here which might be of use.

    Chris
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Limiting Factors ECR Help!!

    In summary with limiting factors (where there is a single limiting factor) its just:

    1) Work out the "contribution per limiting factor" i.e. if its block of wood work out each products contribution per block of wood.

    2) Make the most of the product that has the highest contribution per limiting factor.

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