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December 2023 ACCA exams:

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Limiting Factors – Linear Programming part 1 – ACCA Performance Management (PM)

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  1. Dear John,
    I am having one confusion. We are looking the ways to maximize the contribution. However, contribution is already given as $6 for standard chairs and $9 for executive chairs. From this information, it is shown that the executive chair is giving max contribution. Why we are struggling to find out max. contribution then. Where i am wrong, please guide. Thanks

    • We are trying to get the maximum total contribution. The problem is that both the wood and labour are limited and so we need to find the mix of the two types of chair that makes the biggest total contribution without using more of the wood and more of the labour than is available.

    • If there are more than 2 products then there will only be one limiting factor and therefore you use a key factor or throughput accounting approach as explained in the earlier chapter.

      If there is more than 1 limiting factor then it is a linear programming problem and in Paper PM there can only then be 2 products. More than 2 products would require a different technique which is not in the syllabus for ACCA exams.

    • Of course there are lectures on cost profit analysis!!!!

      The lectures cover everything needed to be able to pass the exam well.

      Try looking at Chapter 8 of the free lecture notes, and the lectures that go with it!

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