A business manufactures three products which all use the same material. The following
information is available.

X Y Z
$000 $000 $000
selling price 160 190 240
direct material 56 68 90
direct labour 35 32 50
variable overhead 28 34 45
contribution 41 56 55

Direct material is in short supply.

In which order should the products be manufactured to maximise profits?

Q: What topic does this question test?

This question tests Decision Making in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting May/June 2015 examination, Paper 1 Variant 2 (9706_s15_qp_12.pdf).

Question

A business manufactures three products which all use the same material. The following
information is available.

X       Y       Z
$000    $000    $000
selling price    160     190     240
direct material  56      68      90
direct labour    35      32      50
variable overhead 28      34      45
contribution     41      56      55

Direct material is in short supply.

In which order should the products be manufactured to maximise profits?

Oracle Prep · Accepted Answer

The correct answer is B: Y → X → Z.

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