Exhibit 12.4.
The following questions use the information below.
The manager of a Washington, DC sightseeing tour company is concerned about overbooking for one of his bus tours. The bus has 15 seats but sometimes there are empty seats. His records show that about 20% of ticket holders do not show up for their tour. Tickets cost $10 and are non-refundable. If the manager overbooks the tour and more than 15 passengers show up, some of them will be bumped to a later tour. This bumping costs the company $25 in various expenses to keep the customer happy until the next tour. The manager wants to see what happens to profits if 18 reservations are accepted.
-Using the information in Exhibit 12.4, what formula should go in cell C14 of the worksheet to determine the Cost of Bumping Passengers?
A) =C5*MAX(C10-C4,0)
B) =C5*MAX(C10,0)
C) =MAX(C10-C4,0)
D) =C5*MAX(C10,C4)

Question

Exhibit 12.4.
The following questions use the information below.
The manager of a Washington, DC sightseeing tour company is concerned about overbooking for one of his bus tours. The bus has 15 seats but sometimes there are empty seats. His records show that about 20% of ticket holders do not show up for their tour. Tickets cost $10 and are non-refundable. If the manager overbooks the tour and more than 15 passengers show up, some of them will be bumped to a later tour. This bumping costs the company $25 in various expenses to keep the customer happy until the next tour. The manager wants to see what happens to profits if 18 reservations are accepted. 
-Using the information in Exhibit 12.4, what formula should go in cell C14 of the worksheet to determine the Cost of Bumping Passengers?
A) =C5*MAX(C10-C4,0) 
B) =C5*MAX(C10,0) 
C) =MAX(C10-C4,0) 
D) =C5*MAX(C10,C4)

Quizplus · Accepted Answer

The formula for the cost of bumping passengers is the ticket price ($10) multiplied by the maximum of either the number of overbooked passengers (C10-C4) or 0, since if there are not enough passengers to bump, there is no cost. Therefore, the correct formula is =C5*MAX(C10-C4,0), which is choice A.

Exhibit 12.4. The Following Questions Use the Information Below