Exhibit 81
the Following Questions Pertain to the Problem and Spreadsheet

question 13

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.
$\begin{array}{lccc}\text { Product } & \text { A } & \text { B } & \text { Avalable resources } \\\hline \text { Labor hr/unit) } & 3 & 2 & 150 \\\text { Material ounces/unit) } & 1 & 2 & 200 \\\text { Manufacturing cost\$/unit) } & 25 & 18 & \\\text { Demand units) } & 20-.10^{*} \mathrm{P}_{1} & 30-.07^{*} \mathrm{P}_{2} &\end{array}$
Let X₁ = demand for As and X₂ = demand for Bs.Let P₁ = price for As and P₂ = price for Bs

-An office supply company is attempting to determine the order quantity for laser printer toner cartridges which are sold to local businesses.Annual demand is 20,000 units and each cartridge costs the store $25.It costs $30 to place an order and the inventory carrying cost rate is 25% of the value of the item.The following spreadsheet has been set up to solve the problem.What formula goes in cell B11 in this problem?
$\begin{array}{|c|c|c|}\hline & \text { A } & \text { B } \\\hline 1 & & \\\hline 2 & & \\\hline 3 & \text { Annual Demand: } & 20,000 \\\hline 4 & & \\\hline 5 & \text { Cost per Unit: } & \$ 25 \\\hline 6 & \text { Ordering Cost: } & \$ 30 \\\hline 7 & \text { Carrying Cost: } & 25 \% \\\hline 8 & & \\\hline 9 & \text { Order Quantity: } & 483.73 \\\hline 10 & & \\\hline 11 & \text { Total Cost: } & \$ 502,738.61 \\\hline\end{array}$

• A)=B3*B7+B9/B3*B6+B9*2+B5*B7
• B)=B3*B5+B3/B9*B6+B9/2*B5*B7
• C)=SQRTB3*B5+B3/B9*B6+B9/2*B5*B7)
• D)=B3*B3+B3/B9+B6*B9/2*B5*B7

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Definitions:

Unit Product Cost

The total cost (both direct and indirect) associated with producing one unit of a product, used in pricing and profitability analysis.

Absorption Costing

A method of accounting that incorporates all costs related to manufacturing, including direct materials, direct labor, as well as both variable and fixed overheads, into the product's price.

Unit Product Cost

The cost assigned to a single unit of product, encompassing all the costs incurred to produce, manufacture, or acquire that unit.

Absorption Costing

A method in accounting that totals up all expenses of manufacturing including costs for direct materials, direct labor, along with variable and fixed overhead, assigning them to the cost of a product.