ECR question

sanna Registered Posts: 13 New contributor 🐸
I need some help. I have a question regarding Limitating factors
there are 3 departments and Limited Direct Labour Hours availaible and needed to work out the Profit Maximising


Output Sold per unit during Month 80
sales revenue 225
Direct Materials per unit 25
Direct Labour Hours per unit
Dept A 2
Dept B 7

Direct Labour per Hour per unit
Dept A 9.10
Dept B 5.10

Fixed Costs for the month Are £4000

Limited hours of 400 available- how do you work out the profit maximising and how many units can be produced.

How much


  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
    Not enough information given!

    you need to calculate contribution per unit.

    then calculate contrubution per labour hour per unit to decide which unit you need to produce first, followed by next highest contribution per unit ......and the allocate the remaining hours to the productions of other units.

    calaculate total maximum contribution from production lesss fixed costs equals maximum profit
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