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x Y Z
Selling Price 80 90 100
Mat. 20 30 25
Lab. 30 15 40
Share of g/ohead 10 15 15
Profit p.u 20 30 20The same employees are used to make all three product. Maximum demand for any product is 1000 per month. Available labour is $55,000 monthly
Cost to buy in 55 65 105
The answer for lost contribution per $ labour:
0.17 1.33 N/APlease can you advise how they got this answer?
I should add, I understand the contribution per unit to make and contribution if bought.
The variable cost of making X is 20 + 30 = 50.
Therefore the extra cost of buying X externally is 55 – 50 = 5 per unit.
The labour cost is 30 per unit.Therefore the extra cost per $ of labour = 5/30 = 0.17
The same for the others.
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