CIMAPRO19-P01-1 Exam - Topic 10 Question 31 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 31
Topic #: 10

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

* Refer to your answer in the previous question.

The optimal solution to the previous question shows that the shadow prices of skilled labour and direct material A are as follows:

Skilled labour $ Nil Direct Material A $11.70

Explain the relevance of these values to the management of JRL.

Select ALL the true statements.

AThe shadow price equals the additional contribution that would be earned from one extra unit of a scarce resource.

BIn a situation such as this, where a number of resources are scarce, the shadow price of any particular scarce resource will depend on whether or not the resource is not binding.

CThe shadow price for skilled labour is NIL because although there is a shortage of skilled labour it does have a constraining effect on output of JR as other resources are more scarce.

DSince material A is one of the binding constraints, if the availability of material A could be increased by one unit, this would change the optimal plan.

EThe decrease in contribution as a result of this change is the value of the shadow price of material A. The shadow price thus represents the maximum premium that should be paid for an additional unit of material A.

Show Suggested Answer

Suggested Answer: A, D

References:

by Xuan at May 09, 2022, 10:40 AM

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Huey

5 months ago

I thought shadow prices were always positive. This is interesting!

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Rosendo

6 months ago

Binding constraints really change the game, huh?

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Bettina

6 months ago

Wait, so skilled labor has no value? That seems off.

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Marjory

6 months ago

Totally agree, especially for material A!

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Denise

6 months ago

Shadow price shows the extra contribution from scarce resources, right?

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Ricki

6 months ago

I'm a bit unsure about this one. I know the basic stats functions like sum, average, and count, but addtotals is throwing me off. I'll have to think this through carefully.

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Francesco

6 months ago

This seems like a straightforward comparison between my organization's productivity and the industry standard. I'll need to carefully analyze the information provided to determine the most likely conclusion.

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Merilyn

6 months ago

Okay, let's think this through. We need to have the tunnel endpoints support both IPv4 and IPv6, and we need to configure static addresses for at least one of the protocols. The other options seem less relevant, so I'll focus on those key requirements.

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Jacklyn

6 months ago

Hmm, I'm a bit unsure about how to approach this. The tax depreciation and timing of the payments seem tricky. I'll need to review my notes on these types of problems.

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Jaime

7 months ago

Hmm, I'm a bit confused on this one. I know the Douglas-Peucker algorithm is used for line generalization, but I'm not sure which geometric effect would be the best choice here. I'll have to think this through carefully.

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