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Variable Cells Constraints Which Parameter Is Most Sensitive to an Increase in Its

question 31

Multiple Choice

Variable cells
$\begin{array} { | r | r | r | r | r | r | r | } \hline \text { Cell } & \text { Name } & \begin{array} { c } \text { Final } \\\text { Value }\end{array} & \begin{array} { c } \text { Reduced } \\\text { Cost }\end{array} & \begin{array} { c } \text { Objective } \\\text { Codficient }\end{array} & \begin{array} { c } \text { Allowable } \\\text { Increase }\end{array} & \begin{array} { c } \text { Allowuble } \\\text { Decrease }\end{array} \\\hline \text { \$B\$6 } & \text { Activity 1 } & 3 & 0 & 30 & 23 & 17 \\\hline \text { \$C\$6 } & \text { Activity 2 } & 6 & 0 & 40 & 50 & 10 \\\hline \text { \$D\$6 } & \text { Activity 3 } & 0 & - 7 & 20 & 7 & 1 \mathrm { E } + 30 \\\hline\end{array}$
Constraints
$\begin{array}{|r|r|r|r|r|r|r|}\hline \text { Cell } & \text { Name } & \begin{array}{c}\text { Final } \\\text { Value }\end{array} & \begin{array}{c}\text { Shadow } \\\text { Price }\end{array} & \begin{array}{c}\text { Constraint } \\\text { R.H. Side }\end{array} & {\begin{array}{c}\text { Allowable } \\\text { Increase }\end{array}} & \begin{array}{c}\text { Allowable } \\\text { Decrease }\end{array} \\\hline \$ \mathrm{E} \$ 2 & \text { Resource A } & 20 & 7.78 & 20 & 10 & 12.5 \\\hline \$ \mathrm{E} \$ 3 & \text { Resource B } & 30 & 6 & 30 & 50 & 10 \\\hline \$ \mathrm{E} \$ 4 & \text { Resource C } & 18 & \mathrm{0} & 40 & 1 \mathrm{E}+30 & 22\\\hline\end{array}$
Which parameter is most sensitive to an increase in its value?

Understand the role of manufacturing overhead in product costing and how it is allocated and adjusted.

Grasp the treatment of underapplied or overapplied overhead in financial records and the importance of proration.

Understand the components and calculation methods for inventory valuation.

Comprehend the assignment and implication of direct labor costs in job costing.

Definitions:

LIFO Inventory Method

An accounting method that assumes the most recently produced items are sold first and uses those costs for accounting.

Increasing Unit Costs

Refers to a situation where the expenses associated with producing each additional unit of a product or service rise over time.

Lower Income Taxes

Strategies or circumstances that result in a reduction of the amount of income taxes a person or company owes.

Goods Available for Sale

The total quantity of goods that a company has in its inventory available to be sold during a specific period.