Question 5

Triad Children's Center (TCC), a non-profit organization, uses relevant cost analysis to determine whether new services are desirable. TCC is looking at adding a new educational program for grade school children who are having difficulty with their reading and math skills. The following relevant costs are expected if the program is accepted:

Costs (per year)
Program Director salary	$	49,000
Part-time Assistants	$	27,000
Variable cost per child	$	1,200

TCC estimates that a maximum of 40 children will participate in this program in the first year. If TCC decides to implement this program, funding will be received from the City Chamber of Commerce ($48,000) and a local Private University Endowment Fund ($30,000).

Calculate the expected surplus or deficit from operations given the above information.

Multiple Choice

• $56,000 surplus.

• $38,000 surplus.

• $45,000 deficit.

• $46,000 deficit.

• Some amount other than those listed here.

Keego Enterprises manufactures two products, boat wax and car wax, in two departments, Mixing and Packaging. The Mixing Department has 800 hours per month available while the Packaging Department has 1,400 hours per month available. Production of the two products cannot exceed 30,000 pounds. Data on the two products follow:

Product	Contribution Margin (per 100 pounds)				Hours per 100 Pounds of Output: Mixing (M)				Hours per 100 Pounds of Output: Packaging (P)
Boat wax (B)	$	240				2.0				2.5
Car wax (C)	$	220				1.6				4.0

The Mixing Department (M) constraint for the Keego linear program would be (where B and C are expressed in 100-pound units of output):

Multiple Choice

• 1.6M + 4P 30000.

• 2B + 1.6C 800.

• 2B + 1.6C 800.

• 2B + 1.6C 800.

• 3.6M + 6.5P 30000.