Priddy Products Limited Manufactures an Industrial Grade Floor Polish Which

question 3

Multiple Choice

Priddy Products Limited manufactures an industrial grade floor polish which it sells in 10kg tubs. Each tub sells for £32.50. Direct materials per tub cost £4.40 and direct labour costs £3.50. Factory production overhead is recovered on the basis of direct labour hours. Each tub of product requires 20 minutes of direct labour input, and the recovery rate per labour hour is £31.74. What is the contribution per tub of polish?

• A) £ 25.67
• B) £ 24.60
• C) £18.60
• D) £34.00

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Definitions:

Opportunity Loss Table

A table used in decision analysis that quantifies the difference between the payoff from the best action and all other actions for each state of nature.

Payoff Table

A decision-making tool used in statistics and business to show the expected outcomes of different decisions under various states of nature.

Decision Matrix

A tool used in decision-making to evaluate and prioritize a list of alternatives or options, based on a set of criteria.

Payback Period Matrix

A conceptual tool used in finance to evaluate the time required for an investment to return its initial cost, considering various scenarios or criteria.