A Level Accounting (9706)•9706/12/M/J/24
Explanation
Rank by contribution per labor hour
Steps:
- Calculate labor cost per unit: X 8), Y 8), Z 8).
- Compute contribution per unit: X 18–14 (21), Z 50–$25).
- Determine contribution per labor hour: X 10/0.5), Y 14/2), Z 25/2.5).
- Rank descending: X (10), Y ($7) for maximum profit.
Why D is correct:
- Prioritizing highest contribution per limiting factor (labor hour) follows throughput accounting principle to optimize scarce resource use.
Why the others are wrong:
- A: Starts with lowest per-hour contribution (Y at $7), minimizing profit.
- B: Identical to D (likely a listing error), but assumes distinct; otherwise invalid.
- C: Ranks Z (20), underutilizing highest-yield labor.
Final answer: D
Topic: Traditional costing methods
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