An error in paper June 2005 ECR?

- Task 2.4 deals with limiting factor, where there are two products B and C and only 3,500,000 hours available. The contribution earned is calculated by multiplying the allocated machine hours by the contribution/machine hour. Whereas in Paper from Dec 2006 the correct answer states; total contribution= contribution/unit*units made. Very confusing.....I believe there is an error in 2005 paper?

- Can someone please confirm the entries in journal for the apsorption of fixed o/hs?
overheads absorbed 6,600 Dr WIP- Cr Fixed O/h
actual fixed o/hs 6,200 Dr Fixed O/h
overabsorbed 400. Dr Fixed O/h
I can't understand the answers to the task 1.5 in June 2004 paper.
Good luck to all tomorrow!:thumbup1:


  • hanapospis
    hanapospis Registered Posts: 111 ? ? ?
    Hi, In task 2.4 paper from 2005 there is a limiting factor of 3500000 hours available. You have allocated the hours as 1,000,000 to product B and 2,500,000 to product C. We need 2 hours to make product B and 5 hours to made product C. Therefore:
    1,000,000 hours allow us produce 500,000 of product B and 2,500,000 hours allow us produce 500,000 of product C as well.
    Total contribution made = product made x contribution per product
    500,000 x 2.5 = 1,250,000
    500,000 x 3,5 = 1,750,000

    Hope that helps I am not very good at explaining things.
  • talinka
    talinka Registered Posts: 45 ? ? ?
    Thank you for your reply. Have you checked the Dec 2006 paper? Where the contribution is calculated as units made multiplied by !! contribution per unit. Which is the way I have learned it. I wonder why in 2005 paper it's done as units made multiplied by !! contribution/machine hour??? I would think we calculate the contribution/machine hour just to be able to rank the products to maximise the profit later. Both tasks are the same, the formulae should be the same, but formulae used is different. Really don't get it.
  • talinka
    talinka Registered Posts: 45 ? ? ?
    I got it! I was multiplying the machine hours, not the units produced. Sorry for confusing you.
  • hanapospis
    hanapospis Registered Posts: 111 ? ? ?
    When you are doing the limiting factors always add into your table the row whit the number of product actually made. It is often missing there to confuse us and to check if we really understand the task or we just learnt the formulas and past papers :tongue_smilie: it is easy to make the same error you made if there is missing the row with the products actually made.

    Good luck tomorrow!!
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