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Hi, I am confused with the question, could you please help.
The following equations have been taken from the plans of DX for the year ending 31 December 20X5:
Contribution (in dollars) = 12 X1 + 5 X2 + 8 X3
Materials: 2 X1 + 3 X2 + 4 X3 = 12,000 kilos
Machine hours: 6 X1 + 4 X2 + 3 X3 = 8,000 machine hours
where: X1, X2, and X3 are the number of units of products produced and sold,
If an unlimited supply of raw material could be obtained at the current price, the product mix that maximises the value of DX plc’s contribution is:
This is a key factor question (although it would not be asked in F5 in this form).
Because the only limited resource is machine hours, you need to rank the products in order of contribution per machine hour.
You should watch our free lecture on throughput accounting. (This is not a throughput accounting question, but the first part of the lecture covers key factor analysis)
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