Limiting factor: Difference between revisions
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''Cost and management accounting''. | ''Cost and management accounting''. | ||
A limiting factor is an input resource which is scarce | A limiting factor is an input resource which is scarce. | ||
Also known as a ''scarce resource'' or ''key factor''. | Also known as a ''scarce resource'' or ''key factor''. | ||
In different situations the limiting factor may be skilled labour, a physical resource, time, or something else. | |||
In different simple situations the most important limiting factor may be skilled labour, a physical resource, time, or something else. | |||
In practice there may well be multiple limiting factors. | |||
In a simple case with a single limiting factor, total contribution and total profit are maximised by focusing on the production that produces the greatest contribution per unit of the limiting factor. | |||
== See also == | == See also == | ||
* [[Contribution]] | |||
* [[Contribution analysis]] | |||
* [[Factors of production]] | * [[Factors of production]] | ||
* [[Production possibility curves]] | * [[Production possibility curves]] | ||
Latest revision as of 09:04, 20 March 2019
Cost and management accounting.
A limiting factor is an input resource which is scarce.
Also known as a scarce resource or key factor.
In different simple situations the most important limiting factor may be skilled labour, a physical resource, time, or something else.
In practice there may well be multiple limiting factors.
In a simple case with a single limiting factor, total contribution and total profit are maximised by focusing on the production that produces the greatest contribution per unit of the limiting factor.
