ALTERNATIVE METHOD OF PRODUCTION - Accounts and Finance for Managers

Alternative Methods of Production

It is a method to identify the best method of production to generate greater contribution as well as profit. The method which is able to earn greater profit only will be considered, known as limiting factor method.

Illustration

Product X can be produced either by machine A or machine B. Machine A can produce 100 units of X per hour and machine B 150 units per hour. Total machine hours available during the year are 2,500. Taking into account the following data determine the method of profitable manufacture.


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