AAT Practise assessment 1 question 1.7 Optimal productiom
jmh
Registered Posts: 42
Hello,
Can someone please explain to me how would you calculate the optimal production from the below information, I can't get my head around this. Thank you in advance
Per unit Jackal £ Hyena £
Direct Materials at £5 per kg 10 15
Direct Labour at £6 per hour 6 12
Variable overheads 2 4
Selling price 25 40
Sales demand 5,000 11,000
materials are limited to 55,000 kg and labour hours to 20,000
Can someone please explain to me how would you calculate the optimal production from the below information, I can't get my head around this. Thank you in advance
Per unit Jackal £ Hyena £
Direct Materials at £5 per kg 10 15
Direct Labour at £6 per hour 6 12
Variable overheads 2 4
Selling price 25 40
Sales demand 5,000 11,000
materials are limited to 55,000 kg and labour hours to 20,000
0
Comments

You need to find which is the limitrd factor
For materials
Jackal is 10/5=2 kg and Hyena 15/5=3kg
J. have sales demand 5000units x 2kg=10000kg
H. Is 11000x3kg=33000kg
This mean we will need 43000kg to fulfil the sales demand and we are told that we have in disposal 55000kg, so this is ok
For labour
J takes 6/6=1 h and H takes 12/6=2h
Therfore for J we have 5000x1=5000h and H is 11000x2=22000h, total of 27000h, which is 7000h more of what we have as a limit, therefore this is our limited factorAAT Level 2. 2018 Distinction
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thank you for your help0

You are welcomeAAT Level 2. 2018 Distinction
AAT Level 3. 2018 Distinction
AAT Level 4. 2019 FSLC 100% MABU 93% MADC 82% PDSY 80%
Xero Certified Advisor0