FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Covine Ltd is a company that makes three products and the variable costs are as follows;
A B C
£ £ £
Direct materials 12 13 15
Direct labour (£12 per hour) 24 36 36
Variable
37 51 53
The sale price of A is £42, B is £57 and C is £56. During the month of June the availability of Direct Labour is limited to 12,000 hours due to staff taking holidays. Sales demand is expected to be 3000 units of A, 3000 units of B and 2000 of C.
Monthly fixed costs are £20,000 and opening stocks are zero.
Question.
Calculate the loss of profit due to this limiting factor
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