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shadow price

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › shadow price

  • This topic has 1 reply, 2 voices, and was last updated 1 day ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 1, 2025 at 7:26 pm #717572
    sooha
    Participant
    • Topics: 61
    • Replies: 66
    • ☆☆

    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 kg

    for 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 #717579
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    Yes – you seem to understand it well 🙂

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘shadow price’ is closed to new replies.

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