A Level Accounting (9706)•9706/11/M/J/20
Explanation
Rank by contribution per unit under equal labor assumption
Steps:
- Note labor shortage as limiting factor, with no hours specified per product.
- Assume equal labor hours per unit across products due to missing data.
- Calculate contribution per unit: X=150, Y=175, Z=190.
- Rank descending by contribution per unit to maximize total contribution: Z, then Y, then X.
Why C is correct:
- Z Y X prioritizes highest contribution per unit of limiting resource (labor), maximizing profit per the throughput accounting principle.
Why the others are wrong:
- A: Starts with lowest-contribution X, wasting limited labor.
- B: Ranks Y over Z, ignoring Z's superior contribution per labor unit.
- D: Places X before Y, suboptimal as Y yields more contribution per labor unit.
Final answer: C
Topic: Costs and cost behaviour
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