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John Moffat.
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- June 1, 2025 at 7:26 pm #717572
Q plc makes two products – Quone and Qutwo – from the same raw material. The selling
price and cost details of these products are as shown below:
Quone Qutwo
$ $
Selling price 20.00 18.00
Direct material ($2.00 per kg) 6.00 5.00
Direct labour 4.00 3.00
Variable overhead 2.00 1.50
––––– –––––
12.00 9.50
––––– –––––
Contribution per unit 8.00 8.50
The maximum demand for these products is 500 units per week for Quone, and an
unlimited number of units per week for Qutwo
.
What is the shadow price of these materials, if material were limited to 2,000 kg per
week? Pick from list
List options are:
• $nil
• $2.00 per kg
• $2.66 per kg
• $3.40 per kgfor this question the Qutwo has high contribution so we calculate the shadow price base on contribution per limits recourse of Qutwo, now if Qutwo was limited demand for example 400 unit, now we can satisfied demand of qutwo, my question is will the shadow price in this case be 2.66 base on the contribution of quone? i just want make sure that i understand the concept well ?
June 2, 2025 at 5:55 am #717579Yes – you seem to understand it well 🙂
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