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Q PLC makes two products-Quone and Qutwo from the same raw material
quone qutwo
$ $
selling price 20 18
direct material($2 per kg) 6 5
direct labour 4 3
variable overhead 2 1.5contribution per unit 8 9.5
the maximum demand for this products is 500kg per week of quone and unlimited demand for qutwo.
what would the shadow price of these materials be if material were unlimited to 2000kgs per week?
Please do not simply type out test questions and expect me to produce an answer. You must have an answer in the same book in which you found the question and so you should ask about whatever it is in the answer that you are not clear about – then I will explain.
You are either mistyped the question or there is an error in your book, because on the figures that you have typed the contribution per unit for qutwo is not 9.5 – it is 8.5.
Also, check the wording of the last two sentences because neither of them make any sense at all. The maximum demand for quone cannot be 500kg!! Material cannot be unlimited to 2000 kgs!!
I assume that you have watched my free lectures on limited factor (key factor) analysis?
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