Consider the Spreadsheet for Stone Age Surfboards Provided Below -If the Unit Profit on Both Graystone and Lava Surfboards

question 11

Multiple Choice

Consider the spreadsheet for Stone Age Surfboards provided below. Use this data to answer the following question(s) , using the Standard Solver.
Stone Age Surfboards is a small manufacturer of two types of popular low-tide surfboards, the Graystone and the Lava models. The manufacturing process consists of two departments: fabrication and finishing. The fabrication department has 8 skilled workers, each of whom works
9.25 hours per day. The finishing department has 5 workers, each of whom works a 6-hour shift per day. Each pair of Graystone surfboards requires 2.5 labor hours in the fabrication department and 2 labor hours in finishing. The Lava model requires 4.2 labor-hours in fabrication and 3.6 labor-hours in finishing. The company operates 6 days a week. It makes a per unit profit of $40 on the Graystone model and $60 on the Lava model. The company anticipates selling at least twice as many Lava models as Graystone models. $\begin{array}{|c|c|c|c|c|}\hline & \text { A } & \text { B } & \text { C } & \text { D } \\\hline 1 & \text { Stone Age Surfboards } & & & \\\hline 2 & & & & \\\hline 3 & \text { Data } & & & \\\hline 4 & &&{\text { Product }} & \\\hline 5 & \text { Department } & \text { Graystone } & \text { Lava } & \text { Limitation (hours) } \\\hline 6 & \text { Fabrication } & 2.5 & 4.2 & 74 \\\hline 7 & \text { Finishing } & 2 & 3.6 & 30 \\\hline 8 & & & & \\\hline 9 & \text { Profit/Unit } & \$ 40.00 & \$ 60.00 & \\\hline 10 & & & \\\hline 11 & & & \\\hline 12 & \text { Model } & & \\\hline 13 & & \text { Graystone } & \text { Lava } \\\hline 14 & \text { QuantityProduced } & & & \text { Hours Used } \\\hline 15 & \text { Fabrication } & & & \\\hline 16 & \text { Finishing } & & & \\\hline 17 & & & & \\\hline 18 & & & & \text { Excess Lava } \\\hline 19 & \text { Market Mixture } & & & \\\hline 20 & & & & \\\hline 21 & & & & \text { Total Profit } \\\hline 22 & \text { ProfitContribution } & & & \\\hline\end{array}$
-If the unit profit on both Graystone and Lava surfboards is increased by $10, what is the shadow price for the finishing hours used?

• A) -4.35
• B) 8.33
• C) 20.65
• D) 32.46

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Definitions:

Warranty Expense

Costs a company expects to incur as a result of repairing or replacing products within the warranty period.

Warranty Costs

Expenses incurred by a company due to servicing or replacing products under warranty.

Premium Expense

The cost associated with purchasing insurance policies, which may be recognized periodically as an expense in financial statements.

Coupon Redemption

The process of a bond investor submitting a coupon to the issuer to receive the interest payment due.