The Wiethoff Company Has a Contract to Produce 10,000 Garden

question 14

Multiple Choice

The Wiethoff Company has a contract to produce 10,000 garden hoses for a customer. Wiethoff has four different machines that can produce this kind of hose. Because these machines are from different manufacturers and use differing technologies, their specifications are not the same and not all four machines have to be used to produce all of the garden hoses. $\begin{array}{cccc}&\text { Fixed Cost }\\&to~ Setup&Variable ~Cost\\\text { Machine } & \text { Production Run } & \text { per Hose } & \text { Capacity } \\\hline 1 & 750 & 1.25 & 6000 \\2 & 500 & 1.50 & 7500 \\3 & 1000 & 1.00 & 4000 \\4 & 300 & 2.00 & 5000\end{array}$ Write a constraint to ensure that if machine 4 is used, machine 1 will not be used.

• A) y1 + y4 ? 0
• B) y1 + y4 ? 1
• C) y1 + y4 ? 1
• D) y1 - y4 ? 1
• E) y1 - y4 ? 0

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Definitions:

Contractual Rate

The interest rate stated in a contract, such as in a loan agreement or bond indenture, determining the amount of interest payments.

Premium on Bonds Payable

The amount by which the sale price of a bond exceeds its face value, reflecting higher-than-market interest rates or increased demand for the bond.

Amortization

The process of spreading out a loan or intangible asset cost over a fixed period of time for accounting and tax purposes.

Straight-Line Method

A method of allocating the cost of an asset evenly over its useful life.