1) An organisation has the following contribution function:

Contribution = 5X + 10Y where

X = the number of units of product X produced, and Y = the number of units of product Y produced.

A graph has identified that the optimal production plan exists at the point where the following two constraints cross:

Skilled labour: 6X + 4Y 62,000 Unskilled labour: 2X + 5Y 50,000

There is a maximum demand of 12,000 units of each product.

What is the number of units of Product Y produced in order to maximise contribution (to the nearest whole unit)?

2) The shadow price of skilled labour for CBV is currently $8 per hour. What does this mean?

A The cost of obtaining additional skilled labour resources is $8 per hour

B There is a hidden cost of $8 for each hour of skilled labour actively worked

C Contribution will be increased by $8 per hour for each extra hour of skilled labour that can be obtained

D Total costs will be reduced by $8 for each additional hour of skilled labour that can be obtained

3) An organisation has the following contribution function: Contribution = 12A + 8B, where

A = the number of units of product A produced, and

B = the number of units of product B produced.

A graph has identified that the optimal production plan exists at the point where the following two constraints cross:

Material X: A + 2B 8,000 Material Y: 2A + B 16,000

There is a maximum demand of 10,000 units of each product.

How many units of Product A are produced in order to maximise contribution

4) The following statements have been made about cost plus pricing.

1. A price in excess of full cost per unit will ensure that a company will cover all its costs and make a profit.

2. Cost plus pricing is an appropriate pricing strategy when jobs are carried out to customer specifications.

Which of the above statements is/are true?

A. 1 only

B. 2 only

C. Neither 1 nor 2

D. Both 1 and 2