Contribution question help!!!!

alexp19740

If anyone can help with this attached level 3 style question, it would be appreciated. It's really the bit where they are asking for the optical mix I am struggling with!

Alpha makes two products Tig and Tag, the info for the next month is as follows: Product Tig

Variable Costs:-

Material Costs (£400 per kilo) - 2400
Labour Cost - 400
Total variable cost 2800

Fixed costs:-

Production costs - 450
Admin Costs - 300
Total Fixed Costs - 750

Profit per unit - 450
Monthly Demand - 200

Product tag
Variable Costs:-
Material Costs (£400 per kilo) - 3000
Labour Cost - 600
Total variable cost - 3600
Fixed costs:-
Production costs - 450
Admin Costs - 300
Total Fixed Costs - 750

Profit per unit - 600
Monthly Demand - 300

a) Complete the following

The contribution per unit for

• Tig
• Tag

Total Contribution for:-

• Tig
• Tag
b) Optical production order for Tig and Tag
c) Optical production in units for Tig and Tag
d) Total contribution for Tig and Tag

Kelly7

Ahh I have an answer for this somewhere I will try dig out my sheets later. X

SandyHood

Alex

I had to read your question twice (I put my specs on to check!)
It's really the bit where they are asking for the optical mix I am struggling with!

Once my eyes had seen your concern - I figured out that optimum or optimal mix is more likely to be what is needed.

If this appears in an exam you sit it means:

1. something is in short supply
2. you need to recognise that some of the demand can not be met due to a limiting factor
3. you need to schedule production to maximise the contribution you will get from the limiting factor

You missed of the key fact in your posting: material availability is limited to 3,000 kgs

I hope the attached word doc helps

I am running a revision day on Sat 28 June in Bromsgrove for Financial Performance
Please email me if you would like to attend
sandy@sandyhood.com

alexp19740

Many thanks guy, just realised I never replied to your kind response!