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Capacity Limitaions?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Capacity Limitaions?

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • October 14, 2021 at 3:00 pm #637678
    Syed Ahsan Ali
    Participant
    • Topics: 111
    • Replies: 69
    • ☆☆

    Sir, Is it true that due to limited labor hours available we have capacity limitations (in example 8 of chapter 19)?

    So we have to use key factor analysis (similar to Throughput accounting) in order to know which product should be made first by taking out contribution per hour (which is obviously what u did in your lecture :)) but my question is that whenever we have limitations on material kgs or labor hours available we need to use key factor analysis even in transfer pricing?

    Otherwise if we don’t have limitations of material kgs or labor hours then we need to answer according to what u did in another example 6.

    The only point we use key factor analysis is because we have limited labors?

    All correct?

    October 14, 2021 at 5:06 pm #637686
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    You refer to examples in Chapter 19. I assume you are referring to our lecture notes but Chapter 19 is on ‘Performance in the not-for-profit sector’ and there are no examples in the chapter.

    We use key factor analysis when there is only one limited resource (which might be labour or it might be materials). (If it is throughput analysis then it is always labour that is the limited resource.)

    If there is more than one limited resource then we use linear programming.

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