A company produces a single product for which standard cost details are as follows. £ per unit Material (£2 per kg) 8 La
Posted: Tue Jul 05, 2022 11:26 am
A company produces a single product for which standardcost details are as follows.
£ per unit
Material (£2 per kg)
8
Labour (£6 per hour)
18
Production overhead
9
Total production cost
35
The item is perishable and no inventories areheld.
Demand for next period will be 6,000 units but only17,000 hours of labour and 25,000 kg of material will beavailable.
Requirement
What will be the limiting factor nextperiod?
A Material only
B Labour only
C Material and labour
D Sales demand
£ per unit
Material (£2 per kg)
8
Labour (£6 per hour)
18
Production overhead
9
Total production cost
35
The item is perishable and no inventories areheld.
Demand for next period will be 6,000 units but only17,000 hours of labour and 25,000 kg of material will beavailable.
Requirement
What will be the limiting factor nextperiod?
A Material only
B Labour only
C Material and labour
D Sales demand