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gavmur [86]
2 years ago
7

If Ed​ Lusk, VP for​ operations, proceeds with the existing prototype​ (option a), the firm can expect sales to be 110 comma 000

units at ​$580 ​each, with a probability of 0.65 and a 0.35 probability of 65 comma 000 at ​$580. ​If, however, he uses the value analysis team​ (option b), the firm expects sales of 85 comma 000 units at ​$740​, with a probability of 0.62 and a 0.38 probability of 60 comma 000 units at ​$740. Value​ engineering, at a cost of ​$100 comma 000​, is only used in option b. Which option has the highest expected monetary value​ (EMV)?
Business
1 answer:
Reptile [31]2 years ago
4 0

Answer:

Option b has the highest expected monetary value​ (EMV)

Explanation:

For Option a:

At probability 0.65:                     At probability 0.35

Units=110,000                              Units=65,000

Amount=$580 each                   Amount=$580

EMV/Total Sales=0.65(110,000*580)+0.35(65,000*580)

EMV/Total Sales=$54,665,000

For Option b:

At probability 0.62:                     At probability 0.38

Units=85,000                              Units=60,000

Amount=$740 each                   Amount=$740

EMV/Total Sales=0.62(85,000*740)+0.38(60,000*740)

EMV/Total Sales=$55,870,000

So Option B has the highest expected monetary value​ (EMV).

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3 years ago
Current operating income for Bay Area Cycles Co. is $40,000. Selling price per unit is $100, the contribution margin ratio is 20
svlad2 [7]

Answer:

Instructions are below.

Explanation:

Giving the following information:

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Selling price per unit is $100

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<u>First, we need to calculate the unitary variable cost. We can use the contribution margin ratio formula:</u>

<u></u>

contribution margin ratio= (selling price - unitary variable cost) / selling price

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unitary variable cost= 80

<u>Now, the contribution margin:</u>

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6 0
2 years ago
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Answer:

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fgiga [73]

Answer:

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