(This illustration shows the case when different key factors are involved.) The following particulars are extracted from the records of a company:
|
Per unit |
||
|
Product A |
Product B |
|
|
Sale price (Rs) |
120 |
130 |
|
Consumption of materials (kg) |
5 |
4 |
|
Material cost (Rs) |
24 |
14 |
|
Direct wages (Rs) |
2 |
3 |
|
Machine hours used |
2 |
3 |
|
Variable overheads |
4 |
6 |
Comment on the profitability of each product (both use the same raw material) when
- Total sales potential in units is limited
- Total sales potential in value is limited
- Raw material is in short supply
- Production capacity (in terms of machine hours) is the limiting factor