Exhibit 8.1 The Following Questions Pertain to the Problem and Spreadsheet Below

question 24

Multiple Choice

Exhibit 8.1
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 B9 of the spreadsheet for this problem?

• A) =B3*B7+C3*C7
• B) =B5*B7+C5*C7
• C) =(B5-B4)*B7+(C5-C4)*B7
• D) =B3*B7+C3*B7+B4*B7+C4*B7

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Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer.

Legal Capital

The minimum amount of capital that a company must maintain as required by law, often to protect creditors.

Assigned

Attributed or designated to a particular task, resource, or responsibility within an organization or process.

Cash Dividend

A payment made by a company out of its earnings to its shareholders, typically in the form of cash.