The Following Questions Pertain to the Problem and Spreadsheet Below

question 46

Multiple Choice

The following questions pertain to the problem and spreadsheet below.
A company makes products A and B from 2 resources, labor and material. The company wants to determine the selling price which will maximize profits. A unit of A costs 25 to make and demand is estimated to be 20 - .10 * Price of A. A unit of B costs 18 to make and demand is estimated to be 30 - .07 * Price of B. The utilization of labor and materials and the available quantity of resources is shown in the table. A reasonable price for the products is between 100 and 200.
Let X₁ = demand for As and X₂ = demand for Bs.
Let P₁ = price for As and P₂ = price for Bs

-Refer to Exhibit 8.1. What formula is used in cell B7 of the spreadsheet for this problem?

• A)= 30 - .07 * C3
• B)= 20 - .1 * B3
• C)= B3 -B4
• D)= B5 * B7 + C5 * C7

Understand the significance of favorable and unfavorable variances and their impact on financial performance.

Identify the importance of budgeted production units and their relationship with actual production in variance analysis.

Recognize the procedure for computing variances at the time of purchase or production.

Interpret the implications of variances for managerial decision-making and cost control.