Quantitative Methods for Accountants Math Problem

Quantitative Methods for Accountants - Math Problem Example Negative shadow price for contract obligation (-'3) indicates that each additional unit of product A to be produced according to the contract provision will have 3-equivalent negative influence on the value of the objective function. Reduction of the amount of product A to be produced and sold will have the opposite effect. Selling price - (Labour time required * shadow price for Labour time - Machine time required * shadow price for Machine time - Raw material required * shadow price for Raw material - Changes in contract amount* shadow price for contract) = .. Shadow price for raw materials (4) indicates that each additional unit of raw material bought or used will have '4-equivalent positive (negative correspondingly) effect on the objective function. Negative shadow price for contract obligation (-'3) indicates that each additional unit of product A to be produced according to the contract provision will have 3-equivalent negative influence on the value of the objective function. Reduction of the amount of product A to be produced and sold will have the opposite effect. d) The impact of producing Product D on the total contribution to profit can be calculated as indicated: Selling price - (Labour time required * shadow price for Labour time - Machine time required * shadow price for Machine time - Raw material required * shadow price for Raw material - Changes in contract amount* shadow price for contract) == '55 - ' (6*0 + 6*0 + 3*4 - 0*(-3)) = ' 55 - ' 12 = ' 43 As the calculated value is positive and quite significant the company also should produce product