Exhibit 8.1
The following questions pertain to the problem and spreadsheet below.
A company makes products A and B from 2 resources, labor and material. The company wants to determine the selling price which will maximize profits. A unit of A costs 25 to make and demand is estimated to be 20 − .10 * Price of A. A unit of B costs 18 to make and demand is estimated to be 30 − .07 * Price of B. The utilization of labor and materials and the available quantity of resources is shown in the table. A reasonable price for the products is between 100 and 200. Let X 1 = demand for As and X 2 = demand for Bs.
Let P 1 = price for As and P 2 = price for Bs
-Refer to Exhibit 8.1. What formula is used in cell B7 of the spreadsheet for this problem?
A) = 30 − .07 * C3
B) = 20 − .1 * B3
C) = B3 − B4
D) = B5 * B7 + C5 * C7

Question

Exhibit 8.1
The following questions pertain to the problem and spreadsheet below.
A company makes products A and B from 2 resources, labor and material. The company wants to determine the selling price which will maximize profits. A unit of A costs 25 to make and demand is estimated to be 20 − .10 * Price of A. A unit of B costs 18 to make and demand is estimated to be 30 − .07 * Price of B. The utilization of labor and materials and the available quantity of resources is shown in the table. A reasonable price for the products is between 100 and 200.  Let X 1 = demand for As and X 2 = demand for Bs.
Let P 1 = price for As and P 2 = price for Bs 
-Refer to Exhibit 8.1. What formula is used in cell B7 of the spreadsheet for this problem?
A) = 30 − .07 * C3 
B) = 20 − .1 * B3 
C) = B3 − B4 
D) = B5 * B7 + C5 * C7

Quizplus · Accepted Answer

Cell B7 calculates the total profit, which is the selling price of A times the demand for A, plus the selling price of B times the demand for B, minus the total cost of producing A and B. Therefore, the formula in cell B7 is: =P₁*X₁ + P₂*X₂ - (25*X₁ + 18*X₂). The only option that shows the formula in cell B3, which calculates the demand for A based on the price of A, is option B.

Exhibit 8.1 The Following Questions Pertain to the Problem and Spreadsheet Below