Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

One business produces three products. The information below was given for each unit: Product X - selling price $450$, direct material $160$, direct labour $115$, contribution $175$, fixed overheads $135$, profit $40$ Product Y - selling price $350$, direct material $100$, direct labour $95$, contribution $155$, fixed overheads $110$, profit $45$ Product Z - selling price $400$, direct material $150$, direct labour $190$, contribution $60$, fixed overheads $10$, profit $50$ Direct labour is scarce. Every unit of direct labour is paid at the same hourly rate. In what order should production take place to maximise profit?

  • AX → Z → Y
  • BX → Y → Z
  • CY → X → Z
  • DZ → Y → X

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