Accounting in Management

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This production would entail the use of 250 labor hours and 2000 Kgs of Materials. Thus, after the demand for Beta is met, we have a balance of 1250 Labour hours and 8000 Kg of Materials. The next higher contributor is Delta. Therefore, we would produce the full order of Delta for this 750 Labour hours and 3000 Kg of Materials. The balance left over would be 500 Labour hours and 5000 Kg of Materials, which would be used for production in respect of Alpha which is the least contributing product. The limiting factors only allow the production of 500 Units of Alpha. The statement shown below would explain the position.In this analysis, there are three types of products Alpha, Beta, Delta. The number of items produced is 500 Units of Alpha, 500 Units of Beta, and 750 Units of Delta respectively. The total contribution is£ 7500 Alpha, £ 11000 Beta, and £ 12750 Delta. There are two constraints in this scene. Materials available are only 10000 Kg and labor hours in 1500. Alpha, Beta, Delta denoted as X1, X2, X3.The limiting factors in the problem are the availability of 1500 labor hours @ £ 20/hour and 10,000kgs of materials @ £ 3/kg. Since 1000 units of Alpha would consume 10,000Kgs materials, there would be no materials left for producing Beta and Delta. Beta has the maximum contribution of £ 22/unit and therefore it has to be produced on Priority. The next higher contribution is from Delta viz. £ 17/unit. Therefore, the second priority would be given to Delta and the third priority to Alpha. This is also in line with Principles of Marginal Costing and meets the requirements of Portland Ltd, to maximize their profit.To understand whether a company can grow as a world-class competitor and to know whether any system within the organization impedes this objective, one has to analyze the basic characteristics of itsfunctioning based on the following indicators.