Foundations of Financial Management
16th Edition
ISBN: 9781259277160
Author: Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 5P
Summary Introduction
To calculate: The expected value of total sales made by Bronco Truck Parts.
Introduction:
Sales Projection:
It refers to projecting future sales by assuming various variables, such as units to be sold, price per unit and demand level. The expected value of sales is calculated by multiplying the sales value with its associated probability.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Hh1.
Account
Consider a product market with three consumers A, B and C with demand function PA = 6 – QA, PB = 6 – 2QB and PC = 12 – QC respectively, where P is the price in dollars and QA, QB and QC are the quantities demanded by Consumer A, B and C respectively. The marginal cost of the product is constant at $4.
(i) If the product is public good, analyse the product and determine the optimal quantity of the product in the market.(ii) How will your answer be different if the product is a private good instead?
(Hi there, may I requst for a detailed step by step explanation as i struggle with this topic. Thank you)
The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows:
ProcurementCost ($)
Probability
LaborCost ($)
Probability
TransportationCost ($)
Probability
10
0.2
18
0.25
2
0.74
12
0.35
20
0.35
5
0.26
13
0.45
22
0.1
25
0.3
Compute profit per unit for the base-case, worst-case, and best-case scenarios.Profit per unit for the base-case: $ fill in the blank 1Profit per unit for the worst-case: $ fill in the blank 2Profit per unit for the best-case: $ fill in the blank 3
Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.Mean profit per unit = $ fill in the blank 4
Why is the simulation approach to risk analysis preferable to generating a variety of…
Chapter 4 Solutions
Foundations of Financial Management
Ch. 4 - What are the basic benefits and purposes of...Ch. 4 - Explain how the collections and purchases...Ch. 4 - With inflation, what are the implications of using...Ch. 4 - Explain the relationship between inventory...Ch. 4 - Prob. 5DQCh. 4 - Discuss the advantage and disadvantage of level...Ch. 4 - What conditions would help make a percent-of-sales...Ch. 4 - Prob. 1PCh. 4 - Philip Morris expects the sales for his clothing...Ch. 4 - Galehouse Gas Stations Inc. expects sales to...
Ch. 4 - The Alliance Corp. expects to sell the following...Ch. 4 - Prob. 5PCh. 4 - Cyber Security Systems had sales of 3,500 units at...Ch. 4 - Dodge Ball Bearings had sales of 15,000 units at...Ch. 4 - Sales for Ross Pro’s Sports Equipment are expected...Ch. 4 - Vitale Hair Spray had sales of 13,000 units in...Ch. 4 - Delsing Plumbing Company has beginning inventory...Ch. 4 - On December 31 of last year, Wolfson Corporation...Ch. 4 - At the end of January, Higgins Data Systems had an...Ch. 4 - At the end of January, Mineral Labs had an...Ch. 4 - Convex Mechanical Supplies produces a product with...Ch. 4 - The Bradley Corporation produces a product with...Ch. 4 - Sprint Shoes Inc. had a beginning inventory of...Ch. 4 - J. Lo’s Clothiers has forecast credit sales for...Ch. 4 - Simpson Glove Company has made the following sales...Ch. 4 - Watt’s Lighting Stores made the following sales...Ch. 4 - Ultravision Inc. anticipates sales of $290,000...Ch. 4 - The Denver Corporation has forecast the following...Ch. 4 - Wright Lighting Fixtures forecasts its sales in...Ch. 4 - The Volt Battery Company has forecast its sales in...Ch. 4 - Graham Potato Company has projected sales of...Ch. 4 - Harry’s Carryout Stores has eight locations. The...Ch. 4 - Archer Electronics Company’s actual sales and...Ch. 4 - Prob. 27PCh. 4 - The Manning Company has financial statements as...Ch. 4 - Conn Man’s Shops, a national clothing chain, had...
Knowledge Booster
Similar questions
- Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Sales Market Reaction in Units Probabilities Low response Moderate response High response Very high response 60 0.10 70 0.30 100 0.50 130 0.10 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Expected value units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation unitsarrow_forwardMyers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 25 0.20 Moderate response 30 0.10 High response 50 Very high response 70 0.10 0.60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Expected value units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation unitsarrow_forwardSampson Corporation is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response High response Very high response Sales in Units 40 Probabilities 0.30 70 0.20 90 120 0.20 0.30 a. What is the expected value of unit sales for the new product? Note: Do not round Intermediate calculations and round your answer to the nearest whole unit.) Answer is complete but not entirely correct. Expected value 70 units b. What is the standard deviation of unit sales? Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Standard deviation 19.24 unitsarrow_forward
- Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: PossibleMarket Reaction Salesin Units Probabilities Low response 60 0.20 Moderate response 80 0.30 High response 100 0.30 Very high response 120 0.20 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forwardMyers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Low response Moderate response High response Very high response Expected value Sales in Units 35 45 60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation Probabilities 0.30 0.20 0.20 0.30 units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) unitsarrow_forwardI have the following additional questions: 1) Calculate the breakeven point in dollars under the current scenario 2) Calculate the number of units to be sold if the company desires a target profit of $225,000. 3) Calculate the sales dollars if the company desires a target profit of $225,000.arrow_forward
- using the projected monthly income figure calculated above, how many unitswould the company need to sell to meet the initial monthly income figure?arrow_forwardMyers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 30 0.10 Moderate response 40 0.10 High response 55 0.20 Very high response 65 0.60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forwardNow suppose that annual unit sales, variable cost, and unit price are equal to their respective expected values—that is, there is no uncertainty. Determine the company's annual profit for this scenario. Round answer to a whole number, if needed.$arrow_forward
- If, Total Fixed cost OMR 40000, Selling price per unit OMR 20, and Variable cost per unit OMR 12. What will be the amount of profit if actual sales are OMR 120000?arrow_forwardSupply and demand curves for a consumer item are give by q = (s(p)=500 + p and q = D(p)=2300-2p respectively p is the price in dollars for one unit of this item and q is the umber of units. The equilibrium price is ' =$600 A sales tax of 3.2% to be directed at the consumers, is under consideration. Determine the amout of money per item that supplies stand to lose due to this tax which is directed at consumers.arrow_forwardSampson Corp. Is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response Bigh response Very high response Expected value Sales in Units 60 80 100 120 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation units Probabilities 0.20 0.30 0.30 0.20 H b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) units 1 of 8 RE Next > Liones reale.Parrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning