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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?
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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