Self-test Esef Ltd wishes to produce three products. The following costs relate to these three products:

Product 1 2 3 Selling price (£) 15 27 39 Raw materials (£) 5 3 12 Labour (£) 6 12 18 Production 180 90 80 The labour rate is £6 per hour and the maximum hours available is 450 hours.

The fixed costs of the company are £56,000.

1. Which one of the following statements is correct?

(a) Labour hours is the limiting factor.

(b) Raw materials is the limiting factor.

(c) Both labour hours and raw materials are limiting factors.

(d) There is no limiting factor.

2. What is the contribution per unit for Products 1, 2 and 3?

(a) £4, £12 and £9

(b) £10, £24 and £27

(c) £9, £15 and £21

(d) £15, £27 and £39 3. What is the contribution per scarce factor for each of Products 1, 2 and 3?

(a) £4, £6 and £3

(b) £4, £12 and £9

(c) £10, £24 and £27

(d) £9, £15 and £21 4. How should Esef Ltd rank the three products so that the most profitable product is produced first?
Rank 1 Rank 2 Rank 3

(a) Product 2 Product 1 Product 3

(b) Product 1 Product 2 Product 3

(c) Product 2 Product 3 Product 1

(d) Product 3 Product 2 Product 1

(e) Product 3 Product 1 Product 2 5. How many units of each product should be produced in order to maximise profit?
Product 1 2 3

(a) 30 90 80

(b) 180 45 60

(c) 180 90 30

(d) 180 90 60