Explain the meaning of limiting factor decision making under CVP analysis and the process of selecting the best production mix stating clearly the other factors that should be considered in such a condition.

ii) A summary of a manufacturing company's budgeted profit statement for its next financial year, when it expects to be operating at 60% of capacity, is given below. Seles 3,000 units at 75 225,000 Less: Direct material 24,000 Direct labour 36,000 Production overhead - fixed 50,000 - variable 15,000 125.000 Gross Profit 100,000 Less: admin, selling & distribution costs fixed 36,000 - variable 21,000 57.000 Net profit 43.000 Company has analyzed two more alternatives; Alternative 1 If the selling price per unit were reduced to 65, the increased demand would utilize 90% of the company's capacity without any additional fixed cost. Further, it has been estimated that due to the increased volume, direct material cost will be reduced to 6 per unit. Alternative 2 To attract sufficient demand to utilize full capacity would require a 20% reduction in the current selling price and a 8,000 special advertising campaign. Further, it has been estimated that due to the increased volume, direct material cost will reduce to 5 per unit and direct labour cost will reduce to 10 per unit