Limiting Factor Analysis - Question

Nadeem_M

Hi, just a quick question, I'm not sure if this is an error from the website or if I'm missing something here?

On step 3 - Calculate the contribution per unit of each product

For Platinum, the total variable overheads have been used as the variable cost - 6,300 which I think is right

But for gold - £4,980 and Silver - £2,160, the fixed overheads absorption have been included in the variable cost, the numbers come from the table above in the example. Should the variable cost not be £4,900 & £2,100?

I'm sure that only variable costs should be used to calculate the contribution per unit, please correct me if I'm wrong as this affects the rest of the calculations I would need to do?

https://accounting-simplified.com/management/limiting-factor-analysis/single/

shamilkaria

Hi @Nadeem_M

I know this post is really old, only saw this now, did you need help on this?

Many thanks

Shamil