Contribution per unit of limiting factor

Kc2016

Could someone help me. I am on part b- I know the answer except I can’t work out how they got the limiting factor. I thought it was contribution/selling price *100. This worked for Lemon but Ginger I get 31.66 and the answer is 21.71???????

dumutroba

Contribution per limited factor is contribution/limiting factor per unit of production which is either material or kg, or labour in hours

In this case is the material, so you will need to divide by the amount of material used per unit

The lemon is 30/40=0.75 kg and ginger is 70/40=1.75kg

Kc2016

How do they get 21.71 for Ginger?

dumutroba

38/1.75kg

Kc2016

Omg thank you. I keep getting really confused with this part. I have an exam Thursday

fedemenni

@Kc2016 I was confused as well for that part. you just need to calculate the contribution for the material or hours used for specific product. that will help you elaborate the best production level etc. I have exam on Wed