CIMA Exam CIMAPRO19-P01-1 Topic 3 Question 99 Discussion

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

Question #: 99
Topic #: 3

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

The optimal solution in 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.

What is the additional contribution that can be earned?

AThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 825

BThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $5, 825

CThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $3, 825

DThus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 570

Show Suggested Answer

Suggested Answer: A

References:

by Brett at Sep 17, 2024, 11:47 PM

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Ryan

8 months ago

Alright, time to put on my problem-solving hat. The key is to understand how the shadow prices relate to the additional contribution. I'll have to do some calculations to figure out the correct answer.

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Lavina

7 months ago

So, the additional contribution that can be earned would depend on these shadow prices. We need to calculate it to make an informed decision.

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Jade

7 months ago

Yes, the shadow price of direct material A is $11.70, which means it's the value of an additional unit of that resource in the optimal solution.

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Jamal

7 months ago

I think the shadow prices of skilled labour and direct material A are crucial for determining the additional contribution.

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Charlie

8 months ago

Okay, let me think this through. The shadow prices tell us the potential increase in contribution if we had more of those resources. With direct material A at $11.70, that sounds promising. *chuckles* I wonder if they'll throw in a free unicorn with the right answer.

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Gail

7 months ago

Haha, a free unicorn would definitely make the decision easier!

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Jutta

7 months ago

Direct material A at $11.70 means more profit potential.

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Glendora

8 months ago

The shadow prices help us see the impact on contribution with more resources.

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Nan

8 months ago

I believe the penalty value at which WRX would decide not to supply the major customer order in full is $4,825.

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Jenifer

9 months ago

Hmm, the question mentions the optimal solution, but it doesn't specify the details of that solution. I'll have to carefully examine the given information to determine the additional contribution that can be earned.

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Bobbye

7 months ago

I believe the penalty value at which WRX would decide not to supply the major customer order in full is $4,825. It's important to consider all these factors.

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Ronny

8 months ago

So, the additional contribution that can be earned is crucial for decision-making. We have to calculate it accurately.

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Mila

8 months ago

The shadow price of skilled labour is nil, but direct material A has a shadow price of $11.70.

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Fabiola

8 months ago

I think we need to focus on the shadow prices of skilled labour and direct material A to understand the relevance to JRL's management.

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Jodi

9 months ago

Yes, they help in determining the additional contribution that can be earned.

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Eugene

9 months ago

The shadow price of direct material A is $11.70, which means that if JRL could obtain an additional unit of this material, it would increase the company's contribution by $11.70. Seems like a good opportunity to maximize profits.

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Grover

8 months ago

User2

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Darrin

9 months ago

User1

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Nan

9 months ago

I think the shadow prices of skilled labour and direct material A are important for decision making.

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