ACCA F5 Pricing – Introduction, Cost plus pricing
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I am stuck for the answer to this question:
A company uses the linear programming model to find the optimal production plan for its two products X and Y, Objective function = Maximise 8x+12y
Subject to the following constraints:
Material 2x+y <=2000
Unskilled labour x+y=400
What is the optimal solution for the output of X and Y
Can you please help me? I have the answer but cant understand how was calculated?
Thank you
Please ask this sort of question in the Ask the Tutor Forum and not as a comment on a lecture (especially when the question is absolutely nothing to do with the lecture!!).
Thanks John. Indeed the business need to decide which cost to used tin setting its selling price in order to make the best possible profit. I do appreciate the discussion aspect on the advantages/disadvantages of cost plus pricing methods.
John does cost plus pricing ignore cost control and if so why?
Yes it does ignore cost control – reducing costs will mean adding less profit and charging a lower selling price. It is an easy policy to operate but in todays environment is not usually a sensible policy.
Okay sir noted with thanks
You are welcome.
Greetings sire!
While explaining the disadvanteges of “Full cost plus” you were telling that if we are able to sell more units(20000 rather than 10000) fixed overheads will be lower(2.5 from 5)..
I dont get it sir as far as i know fixed overheads remain the same regardless of production but variable overheads go up and down regarding the increase and decrease in production.
guide me sir Thanks in advance
i got it sir 馃檪
Great that you have got it 馃檪