An Objective Function Reflects the Relevant Cost of Labor Hours

question 19

Multiple Choice

An objective function reflects the relevant cost of labor hours used in production rather than treating them as a sunk cost.The correct interpretation of the dual price associated with the labor hours constraint is the

• A)maximum premium (say for overtime)over the normal price that the company would be willing to pay.
• B)upper limit on the total hourly wage the company would pay.
• C)reduction in hours that could be sustained before the solution would change.
• D)number of hours by which the right-hand side can change before there is a change in the solution point.

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Definitions:

Cash-Equivalent Amount

The value of an asset that can easily be converted into a known amount of cash within a short period.

Fraud Triangle

A model explaining the factors that cause an individual to commit fraud, including pressure, opportunity, and rationalization.

Opportunity

A set of circumstances that makes it possible to do something, especially in terms of making business decisions or investments that could lead to profit.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from revenue.