Formulate but Do Not Solve the Following Exercise as a Linear

question 149

Multiple Choice

Formulate but do not solve the following exercise as a linear programming problem. Deluxe River Cruises operates a fleet of river vessels. The fleet has two types of vessels: A type-A vessel has 70 deluxe cabins and 150 standard cabins, whereas a type-B vessel has 80 deluxe cabins and 110 standard cabins. Under a charter agreement with Odyssey Travel Agency, Deluxe River Cruises is to provide Odyssey with a minimum of 390 deluxe and 690 standard cabins for their 15-day cruise in May. It costs $43,000 to operate a type-A vessel and $52,000 to operate a type-B vessel for that period. How many of each type vessel should be used in order to keep the operating costs to a minimum?

• A) Minimize: Subject to:
• B) Minimize: Subject to:
• C) Minimize: Subject to:
• D) Minimize: Subject to:

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Definitions:

Raw Materials

Unprocessed or primary substances used in manufacturing to create finished goods.

Retained Earnings

Retained earnings represent the accumulated net income of a company that has not been distributed to shareholders as dividends but is reinvested in the business.

FOH Volume Variance

A measurement in managerial accounting that compares the budgeted factory overhead for actual production volumes against the applied factory overhead based on standard costing.

FOH Budget Variance

The difference between the actual factory overhead costs incurred and the overhead costs allocated to production based on budgeted rates.