The Production Planner for Fine Coffees,Inc

question 46

Multiple Choice

The production planner for Fine Coffees,Inc.produces two coffee blends: American (A) and British (B) .Two of his resources are constrained: Columbia beans,of which he can get at most 300 pounds (4,800 ounces) per week; and Dominican beans,of which he can get at most 200 pounds (3,200 ounces) per week.Each pound of American blend coffee requires 12 ounces of Colombian beans and 4 ounces of Dominican beans; while a pound of British blend coffee uses 8 ounces of each type of bean.Profits for the American blend are $2.00 per pound,and profits for the British blend are $1.00 per pound.For the production combination of 0 American and 400 British,which resource is "slack" (not fully used) ?

• A)Colombian beans (only)
• B)Dominican beans (only)
• C)Both Colombian beans and Dominican beans
• D)Neither Colombian beans nor Dominican beans
• E)Cannot be determined exactly

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by a company through its investment in another company, recognizing income or loss in proportion to its ownership share.

Consolidated Current Liabilities

The combined total of all short-term financial obligations and debts of a parent company and its subsidiaries, due within one year.

Excess Consideration

The amount paid by an acquiring company over and above the fair value of the net identifiable assets of the acquired company, often recorded as goodwill.

Underlying Book Value

The net asset value of a company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.