Exhibit 12.4. The Following Questions Use the Information Below

question 9

Multiple Choice

Exhibit 12.4.
The following questions use the information below.
The manager of a Washington, DC sightseeing tour company is concerned about overbooking for one of his bus tours. The bus has 15 seats but sometimes there are empty seats. His records show that about 20% of ticket holders do not show up for their tour. Tickets cost $10 and are non-refundable. If the manager overbooks the tour and more than 15 passengers show up, some of them will be bumped to a later tour. This bumping costs the company $25 in various expenses to keep the customer happy until the next tour. The manager wants to see what happens to profits if 18 reservations are accepted.
-Using the information in Exhibit 12.4, what formula should go in cell C14 of the worksheet to determine the Cost of Bumping Passengers?

• A) =C5*MAX(C10-C4,0)
• B) =C5*MAX(C10,0)
• C) =MAX(C10-C4,0)
• D) =C5*MAX(C10,C4)

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Definitions:

Long-Term Creditors

Entities or individuals to whom a company owes money, with the obligation for repayment extending beyond one year.

Debt To Total Assets Ratio

A financial metric indicating the proportion of a company's total assets that are financed by debt.

Times Interest Earned Ratio

A financial metric that compares a company's operating income to its interest expenses, used to evaluate its ability to meet its interest obligations.