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Steven says

Hi Sir, in the exam if for example I do the E on the y-axis and S on x-axis obviously the graph will look different but the numbers will still be the same. Is that ok? if not how should I know which product should I put on the x/y axis?

Thanks

Janet says

Hi John

I’m stuck

1. When we find the slope of the ISO line, and push it out, we find the nearest ‘point’ (in this case it was B). This gives us the highest contribution point. Is this correct?

2. When working out S/E, do we always find the intersect of material v labour line? Then work out C?

Thank you in advance!

John Moffat says

1. We move out the contribution line to the furthest point away from the origin, without leaving the feasible region.

2. When finding the optimal mix, we solve together the two lines that intersect at the point where the contribution is the highest (i.e. the point found in (1) above). It certainly will not always be where material and about lines intersect – it could be any two constraints depending on the question.

Janet says

Thanks, got it!

Although I understand, I find it very difficult to understand the 15 mark questions for this topic. In particular I struggle to recognise what the constraints are, and therefore I find it difficult to nail down a formula.

Not expecting a response..I guess I’ll just keep practicing questions to get the hang of it!

Awesome work that you guys are doing – me and my colleagues appreciate it a lot

John Moffat says

You are correct – it is down to question practice. You must obviously learn the technique, but actually sorting out the constraints for each particular question is something you cannot really learn – every question is different – and you can only get good at by practicing.

Thank you for your comment as well

Abdulkareem says

Sir, i am a student of the Institute of Chartered Accountants of Nigerian (ICAN). I have been writing perfromance management and FR since 2012 when the syllabus was changed. Right now, they no longer test MCQ and SAQ which has made it difficult to score cheap marks. Please advice me as am almost fed up with the whole examination.

John Moffat says

I am sorry, but I really don’t know the syllabus or anything for ICAN. All we have is the lectures etc for the ACCA exams. I am sure that some of them will be relevant for your exams, but I can’t really say any more given my lack of knowledge on ICAN.

Abdulkareem says

Thank you sir. ICAN and ACCA use same syllabus except for Public Sector Accounting and Finance (PSAF), Advanced Taxation and Business Law.

Anyway, i have really gained a lot from open tuition. I have this courage that am going to pass the next diet since my enrolment on this forum. Thank you once again

adewale says

What does the iso contribution line depicts

John Moffat says

It is the line showing all combinations that give the same contribution (the contribution line).

As I explain in the lecture, all we need is the angle/slope/gradient of the line.

Bhagat says

Sir, instead of writing the algebra for number of units of S and E that produce maximum contribution, can I just pinpoint the number from point B since I know that is the point of maximum contribution? I got exactly S= 30 and E=5 from the graph that I drew.

John Moffat says

No.

As I do say in the lecture, the examiner expects you to solve the simultaneous equations and not to read the figure from the graph.

najaf says

perfect explanation!!

zameer says

Thank u john

fee says

This is probably a silly question, I’m possibly missing something … but why do we need to do the graph? Why can we not just use the equations to determine the optimum solution?

John Moffat says

No you can’t (and I do explain why not in the lecture).

If there are three (or more) constraints, then solving the equations for 2 of them at a time will not tell you whether or not they are inside or outside the other constraints.

In addition, the examiner specifically tests you on whether or not you understand the graph – sometimes you have been asked to draw the graph, and on other occasions you have been given the graph. In either case, simply solving equations would not be doing what was required.

fee says

Oh I see, thank you. And my apologies for asking something you answered in the lecture. So much information to try and retain!

adnan says

Hi,

If there is spare capacity/slack for materials or labour, than is the shadow price 0 as well?

John Moffat says

Yes it is.

adnan says

Thanks for the promt reply as always.

I wish theres spare capacity for everything, saves a lot of time