Contribution per limiting factor

Hello, can anyone answer this for me? I had £27750 and my tutor had £20250, however we didn’t have time to go through the workings! Thanks in advance!

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Answers

  • EmilyRoseEmilyRose AAT Student, AATQB Posts: 11
    Oops I thought I had attached photos!
    So Sammy has direct materials of £16, direct labour of £7.50 variable overheads of 3, fixed production overheads of 2.50, selling price of £40 sales demand of 6000 units. Requires 1.5 hours/unit, only enough hours to make 4500 units, however you can have 1500 extra hours of labour. What is the max price you would pay for this?
    Contribution per unit £13.50/unit contribution per limiting factor £9.00/unit
  • EmilyRoseEmilyRose AAT Student, AATQB Posts: 11
    Thanks for the help Cornish Pixie, so would it be £13500? If theres only 1500 extra labour hours available?

    Im still confused as Osborne is giving me conflicting information of the most you'd pay for extra units of a limited factor would be the original unit cost + the contribution? £5/hour + £9/contribution :# :# :#
  • CornishPixieCornishPixie Registered, MAAT, AATQB, AAT Licensed Accountant Posts: 22
    What page number is the question on in Osborne
  • EmilyRoseEmilyRose AAT Student, AATQB Posts: 11
    The Sammy question is a Kaplan question however there is a similar one on page 89 of the MACL work book,

    TIA
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