The Janie Gioffre Drapery Company Makes Three Types of Draperies

question 68

Multiple Choice

The Janie Gioffre Drapery Company makes three types of draperies at two different locations. At location I, it can make 10 pairs of deluxe drapes, 20 pairs of better drapes, and 13 pairs of standard drapes per day. At location II, it can make 20 pairs of deluxe drapes, 50 pairs of better drapes, and 6 pairs of standard drapes per day. The company has orders for 2,000 pairs of deluxe drapes, 4,200 pairs of better drapes, and 1,200 pairs of standard drapes. If the daily costs are $700 per day at location I and $800 per day at location II, how many days should Janie schedule at each location in order to fill the orders at minimum cost? Find the minimum cost. Round your answers to the nearest whole number if necessary. ​

• A)Minimum cost of $160,000 occurs with 0 days at location I and 200 days at location II.
• B)Minimum cost of $140,000 occurs with 200 days at location I and 0 days at location II.
• C)Minimum cost of $97,000 occurs with 70 days at location I and 60 days at location II.
• D)Minimum cost of $128,000 occurs with 160 days at location I and 20 days at location II.
• E)Minimum cost of $98,000 occurs with 60 days at location I and 70 days at location II.

---

Definitions:

Risk-Free Rate

The return on investment with no risk of financial loss, typically represented by the yield on government securities.

Market Risk Premium

The extra return investors demand for choosing to invest in the market over a risk-free asset.

Capital Structure Weights

The proportions of a firm's financing that come from different types of capital, such as equity, debt, and preferred stock, used to calculate the weighted average cost of capital (WACC).

Market Value

The now rate for transactions involving the purchase or sale of assets or services.