A Level Accounting (9706)•9706/13/O/N/21
Explanation
Prioritize by contribution margin per labor hour under limiting factor Steps:
- Calculate contribution margin (selling price minus variable costs): A=15, B=20, C=20, D=18.
- Divide by labor hours per unit: A=15/1=15, B=20/2=10, C=20/2=10, D=18/3=6.
- Rank from highest to lowest contribution per labor hour: A (15), then B and C (10 each), then D (6).
- Produce the highest-ranked product first to maximize total contribution.
Why A is correct:
- A yields the highest contribution per labor hour (15), per limiting factor analysis in managerial accounting, optimizing profit from scarce resources.
Why the others are wrong:
- B: Contribution per labor hour (10) is lower than A's, so deprioritized.
- C: Identical to B (10 per hour), still below A's rate.
- D: Lowest rate (6 per hour), least efficient use of labor.
Final answer: A
Topic: Traditional costing methods
Practice more A Level Accounting (9706) questions on mMCQ.me