HELP! Management accounting: Costing Practice Assessment 2 Task 7

gianlucapensotti

Could someone please explain how to work out the below from the ranking part of this question as I have been stuck on it for some time? Am I correct in assuming that it is based on who has a more favorable contribution?

Thank you!

Pian32

That's correct. You need the more favourable contribution for the restricted resource.

gianlucapensotti

Thank you! Are you able to help me with how the other fields are completed?

Pian32

Contribution per mile is - Contribution/miles

7 12

Contibution per hour is - Contribution / hours taken also can divide the per mile figure by the time taken per mile shown both just to indicate they are the same.

5600/56 = 100 4800/24 = 200
7/(56/800)= 100 12/(24/400) = 200

Rank - 2 1

Total time available 52

Above is where I think you're already at. To do the next bit you take your ranking and divide the hours as appropiate.

Driver time
RTU5 is ranked higher so gets all it's allocation of 24 hours
RTU4 gets the remainder 52-24=28

Miles operated
RTU5 will operate all it's miles - 400
RTU4 will operate only a portion - (28/56*800) 400

Contribution can be done with either per mile * miles or per hour * hours

RTU4 - 400*7=100*28=2800
RTU5 - 400*12 = 200*24 =4800

Total - 7600

Fixed cost = 7200

Profit = 400