Management Accounting_8
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School
University of Toronto *
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Course
455
Subject
Industrial Engineering
Date
Dec 6, 2023
Type
docx
Pages
3
Uploaded by ssyhhaydn
Which of the following is an example of a discrete probability
distribution?
A. Johnson Industrial has five manufacturing lines and has determined the chance of a
Five lines operational
20%
Four lines
operational
65%
Three lines
operational
10%
Two lines operational
4%
One line operational
1
%
100
%
B. Nguyen Roofing created the following graph that demonstrates how its profit increa
C. Sven Manufacturing prepared a table that shows the expected profit if the number
advertises, or not:
Five competitors
Eight competitors
No
advertisi
ng
$220,000
$180,000
Advertisi
ng
$310,000
$225,000
D. Soup and Associates is uncertain whether it will receive a government grant related
costs if the grant is received, and if it is not:
Research costs
No grant
$ 50,000
Grant
$100,000
This Answer is Correct
Correct! In a discrete probability distribution, each of a finite number of events
is assigned a probability of occurring. Johnson Industrial has assigned a
probability of the number of lines being operational, with the total of the
probabilities adding to 100%. This means that the organization is certain that
between one and five lines will be operational at all times.
Judge Manufacturing (Judge) has reserved a table at the annual
Canadian Office Supplies Conference. The deposit to reserve the
table was $3,000 and is non-refundable. Judge plans to unveil its
latest product at the conference — the stapleless stapler. Judge’s
CFO has determined that having a table at the conference to unveil
the product could lead to revenue of $50,000. It is now 10 days
before the conference, and inclement weather has caused the
organizers to consider cancelling. The CFO cannot predict how likely
it is that the conference is cancelled due to weather.
Which of the following describes how Judge could use a payoff table
to present the uncertainty of the amount of profit or loss associated
with the conference?
A. Judge could show the range of revenue on a graph for if the conference is cancelled
if it is not.
B. Judge could compare the cost of the conference table to the costs incurred if staple
staplers were to be sold.
C. Judge could multiply the expected revenue for each possible outcome by its probab
D. Judge could show the difference in income depending on whether the conference is
cancelled or not.
This Answer is Correct
Correct! A payoff table sets the actions taken by the organization (attending
the conference or not, amount of sales at the conference) against the events it
cannot control (conference cancellation) to estimate the expected profit of the
alternatives.
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