Forums › ACCA Forums › ACCA MA Management Accounting Forums › Can someone help explain limiting factor? I am having difficulty understanding
- This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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- March 8, 2018 at 8:37 pm #441583AnonymousInactive
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Costs and selling prices per unit are as follows:
Product Rice Water Jello
$/unit $/unit $/unit
Selling price 92.00 110.00 120.00
Material X ($12/kg) 6.00 12.00 24.00
Material Y ($20/kg) 15.00 20.00 20.00
Material Z ($18/kg) 22.50 27.00 27.00
Labour ($30/hour) 12.00 13.50 18.00Fixed production overheads attributable to the manufacture of these products are $300,000 per month.
DKL is preparing its production plans and has estimated the maximum demand from its customers in the next month to be 7,000 units for Rice, 11,000 units for Water and 8,500 units for Jello
Each product passes through two departments – Assembly and Finishing. The number of each product that can be finished in one hour in each department is as follows:
Product Number of Units per hour
Assembly Finishing
Rice 3 units 5 units
Water 4 units 5 units
Jello 3 units 5 units
There are 5,000 hours available in each Department.March 9, 2018 at 8:20 am #441667Limiting factors are no longer examinable in Paper F2 and have not been examinable for many years.
They are examined in Paper F5. - AuthorPosts
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