Scenario 13.1 - Nefarious

question 51

Multiple Choice

Scenario 13.1 - Nefarious
The tenured professor routinely led student groups on factory tours in exotic locales,and one popular destination was an island south of Miami.The students enjoyed this happy little island and the professor liked it because he could supplement his income by bringing back a few boxes souvenirs he could sell to his friends.The souvenirs cost the professor $125 a box and he sells them for $290 a box.Souvenirs that dry out due to age can be sold for $80.Experience has shown that the demand for boxes of these souvenirs has a mean of 80 with a standard deviation of 20.
-Naturally,the professor will purchase the optimal number of boxes.(He's had a course or two in supply chain management and knows this model well. ) What is his expected profit from purchasing the optimal number of boxes?

• A)$11,975
• B)$11,455
• C)$11,165
• D)$10,835

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Definitions:

Principle Of Exceptions

A management principle emphasizing attention and resources on areas that deviate from the norm or expected results.

Standard Costs

Predetermined costs for products or services used to measure against actual costs for performance management and budgeting.

Actual Costs

The real expenses incurred during a specific period, as opposed to budgeted or estimated costs.

Cost Variance

The difference between the actual cost incurred and the standard or budgeted cost, used in budgeting and financial analysis.