Page 277 - P1 Integrated Workbook STUDENT 2018

Supplementary objective test questions

2.7 ABC has the following information about its 3 products:
Product A B C
$ $ $
Sales price 100 75 80
Material cost 32 20 15
Labour ($10 per hour) 30 20 15
Variable overhead 5 15 18
Fixed overhead 5 10 20
––––– ––––– –––––
Profit per unit 28 10 12
Demand 1,000 2,000 3,000
Current production plan 500 0 3,000
Labour is a scarce resource and the current production plan has correctly
utilised the available labour to maximise contribution.

If ABC were able to source more labour, what would be the shadow price
per hour of labour for Product A?

A $0

B $10

C $11

D $21

2.8 A firm of surveys provides teams of staff on two types of service, industrial
premise surveys (P) and commercial premise surveys (C). Both services use a
combination of junior and senior surveyors, which are both in short supply, and
each service needs a total of 10 staff hours.

Industrial premise surveys require one junior surveyor hour for each senior
surveyor hour, whereas commercial premise surveys require 4 junior surveyor
hours for each senior surveyor hour.

Assuming that only 50,000 hours of junior surveyor time will be available,
what is the constraint on service provision imposed by junior surveyors?

A 5P + 8C ≤ 50,000

B P + 4C ≤ 50,000

C 5P + 2C ≤ 50,000

D P + 5C ≤ 50,000

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