Limiting Factor Quiz Questions And Answers

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Quizzes Created: 6 | Total Attempts: 5,010

Questions: 14 | Attempts: 463 | Updated: Sep 4, 2023

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A limiting factor is any factor that restricts a company or an organization's activities. Play this quiz on limiting factors containing questions and answers. Firms can be faced with deficits resulting from drawbacks in the planning process and other factors affecting the business. For this reason, an accountant should be able to plan with minimum factors. Test your understanding of the topic by playing this quiz. The quiz will also provide you with valuable information. All the best!

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Current Version
Sep 04, 2023

Quiz Edited by
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Oct 05, 2011

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Limiting Factor Quiz Questions And Answers

Firms face many constraints on their activity and plan accordingly: - demand - skilled labor and other production resources - finance (‘capital rationing’).

The usual objective in questions is to maximise profit. Given that fixed costs are unaffected by the production decision in the short run, the approach should be to maximise the ____________ earned.

If there is one limiting factor, then the problem is best solved using _ ____ analysis

Where there are two or more resources in short supply which limit the organization’s activities then ______ is required to find the solution.

Linear programming is used to:

Limiting factor analysis - Assumptions: There is a single quantifiable objective – e.g. maximise contribution. In reality there may be multiple objectives such as maximising return while simultaneously minimising risk.

Limiting factor analysis - Assumptions: Each product always uses the same quantity of the scarce resource per unit. In reality this may not be the case. For example, learning effects may be enjoyed.

Limiting factor analysis - Assumptions: The contribution per unit is variable. In reality this may not be the case: - the selling price may have to be increased to sell more - there may be economies of scale, for example a discount for buying in bulk

Limiting factor analysis - Assumptions: Products are not independent – in reality - customers may expect to buy both products together - the products may be manufactured jointly together.

Limiting factor analysis- Assumptions: The scenario is long term. This allows us to ignore fixed costs.

_ is the amount by which a resource is underutilized. It will occur when the optimum point does not fall on a given resource line. _ is important because unused resources can be put to another use, e.g. hired out to another manufacturer

Non-critical constraints will have _____ shadow prices as slack exists already

Shadow price should be considered carefully. For example, the shadow price of labor may be calculated as $20 per hour. However, it may be possible to negotiate a _____ shadow price than this.

If more of the critical constraint is obtained, the constraint line will move outwards altering the shape of the ________ region. After a certain point there will be little point in buying more of the scarce resource since any non-critical constraints will become critical.

Limiting Factor Quiz Questions And Answers

Firms face many constraints on their activity and plan accordingly: - ________ demand - ________ skilled labor and other production resources - ________ finance (‘capital rationing’).

The usual objective in questions is to maximise profit. Given that fixed costs are unaffected by the production decision in the short run, the approach should be to maximise the ____________ earned.

If there is one limiting factor, then the problem is best solved using ___ ______ analysis

Where there are two or more resources in short supply which limit the organization’s activities then ______ ____________ is required to find the solution.

Linear programming is used to:

Limiting factor analysis - Assumptions: There is a single quantifiable objective – e.g. maximise contribution. In reality there may be multiple objectives such as maximising return while simultaneously minimising risk.

Limiting factor analysis - Assumptions: Each product always uses the same quantity of the scarce resource per unit. In reality this may not be the case. For example, learning effects may be enjoyed.

Limiting factor analysis - Assumptions: The contribution per unit is variable. In reality this may not be the case: - the selling price may have to be increased to sell more - there may be economies of scale, for example a discount for buying in bulk

Limiting factor analysis - Assumptions: Products are not independent – in reality - customers may expect to buy both products together - the products may be manufactured jointly together.

Limiting factor analysis- Assumptions: The scenario is long term. This allows us to ignore fixed costs.

_____ is the amount by which a resource is underutilized. It will occur when the optimum point does not fall on a given resource line. _____ is important because unused resources can be put to another use, e.g. hired out to another manufacturer

Non-critical constraints will have _____ shadow prices as slack exists already

Shadow price should be considered carefully. For example, the shadow price of labor may be calculated as $20 per hour. However, it may be possible to negotiate a _____ shadow price than this.

If more of the critical constraint is obtained, the constraint line will move outwards altering the shape of the ________ region. After a certain point there will be little point in buying more of the scarce resource since any non-critical constraints will become critical.

Firms face many constraints on their activity and plan accordingly: - demand - skilled labor and other production resources - finance (‘capital rationing’).

If there is one limiting factor, then the problem is best solved using _ ____ analysis

Where there are two or more resources in short supply which limit the organization’s activities then ______ is required to find the solution.

_ is the amount by which a resource is underutilized. It will occur when the optimum point does not fall on a given resource line. _ is important because unused resources can be put to another use, e.g. hired out to another manufacturer