ECR Dec 06 past paper

Nikkih

Hiya, has anyone done question 2.4 on the Dec 06 past paper, ive worked out the contribution per unt, machine/hours then it comes down to the hours and the unit which im stuck on as it only gives you the hours per unit

Help pls
Thanks

PAMDILL

Yes but a while ago, remind me of the question

Nikkih

Its hard to explain its if the company use 3000 hours a mth how many units does the product need to sell and make, which im usually ok but really stuck on this qustion its different to the way ive done it in the past

visha

see if the explanation below expains


a)Product………………………......................…………V………………..……..W
b)Selling price………………….…...................………30………………………40
c)Marginal Cost………………...................….……….20………………………25

d)Contribution per unit……................………..…..£10…………..…………£15

e)Machine Hr per Unit………...................……………2……………………….5


f)contribution per m/c hr (d divide by e)...........…£5……………………£3

g)product ranking (highest 1st)…………..............….1……………………..2

h)Demand for product……………....................……..1000 units…………..1500 units
i)Required hrs to produce (e x i)……..............…2000 hrs…………….7500 hrs

Limited hours available……(3000 Hrs)

Allocate maximum hrs to V ranking 1 because it gives highest contribution per Hr.

j)…Allocate Hrs………………...........................………….2000 hrs
k)..Allocate balance hrs…3000-2000………….................………………..1000 hrs

l) Units made = (j divide by e)…………….................1000 units…………..200 units
m) contribution per unit –see (d) above…...............£10…………………£15
n) total contribution (l x m)……...............………….£10,000……………..£3,000……=£13,000
o) less Fixed Costs…………………………………………………........................…………….£ 9,000
p) net profit……………………………………………………………………..............................…..£ 4,000