Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › BPP ACCA Revision Kit pg 35 no 111
- This topic has 5 replies, 2 voices, and was last updated 3 years ago by
John Moffat.
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- October 29, 2020 at 7:23 pm #593473
I understood how I got the $1.50 however could not understand ‘the next 38,000 direct labour hours’
October 30, 2020 at 9:13 am #593503The shadow price is $1.50 because each extra hour of labour they get will mean they can produce an extra 0.25 units of Y.
However once the have enough labour to produce 12,000 units of Y (together with the 10,000 units of X) they will not want to buy any more labour because the demand for Y is only 12,000 units. At that level of production they will be using 98,000 hours which is 38,000 hours more than is currently available.
October 31, 2020 at 8:45 am #593613still cannot understand how did you get to 98,000 hours (that is the 38,000 hours extra)
October 31, 2020 at 11:10 am #593643You know from the labour constraint given in the question that each unit of X takes 5 hours, and each unit of Y takes 4 hours.
If they produce 10,000 units of X and 12,000 units of Y (for the reasons I have already explained). then the total labour hours is 98,000.
Have you watched my lectures on linear programming?
October 31, 2020 at 3:55 pm #593673Now I understand I will have a look again at the lectures
November 1, 2020 at 8:36 am #593711You are welcome 🙂
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