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Hi John,
I was attempting the MCQs quiz and I came across the following question:
Which of the following is not a likely cause of an adverse labour rate of pay variance?
A. Buying less expensive materials
B. Overtime having been worked
C. Buying more expensive materials
D. Using more skilled workersI knew B and D could not be the answer. Could you explain briefly why the the answer is C and not A.
Regards,
SleyimI mean I will draw the graph and identify the two constraint lines to solve for the optimum production mix. But there are a number of ways of solving the two lines.
Solving the two equations I could do manually (elimination or substitution) or through a scientific calculator.
And thank you for the hint with the requirement for workings, I have always been skipping to the final answer, thats why I want to know in the case of linear programming if the calculator short cut is allowed.
***no one is actually going to buy MORE than their normal usage just because price went down.
Hi Marylise,
I am not sure, I may be wrong.
Regarding your first question what it means if your full cost per unit is $10 and you have a selling price per unit of more than $10, say $12, then yes the company will cover all costs and make a profit of $2. Moreover, it doesn’t matter how the fixed costs are allocated, the $10 includes the FULL cost.
Regarding your second question, when elasticity of demand is inelastic it automatically means no matter what you do, you wont be able to persuade people to buy more of your product (customers are not sensitive to any change). For instance, if you decrease the price to get people to buy more they will not buy as much as you hoped. I think a good example would be vegetables, no one is actually going to buy than their normal usage just because price went down.
I hope that clears it.
Regards,
Sleyim