The least-cost method, Managerial Accounting

The least-cost method

The process is described as follows: Assign as much as possible to the variable with the least unit cost in the whole tableau. (Ties are broken randomly). Cross out the fulfilled row or column. (As in the northwest-corner technique when both column and row are satisfied simultaneously, only one might be crossed out). After adjusting the supply and demand for all uncrossed-out rows and columns, repeat the process by assigning as much as possible to the variable with the smallest uncrossed-out unit cost. The process is complete whenever exactly one row or one column is left uncrossed-out.

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The total cost related with this answer is Shs 335 which is better (smaller) than the one provided by the northwest-corner method.

 

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Posted Date: 12/7/2012 7:33:37 AM | Location : United States







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