Fuzhou Spa is considering adding one of two services, seaweed body wraps or hot stone massages. The seaweed body wrap will result in additional revenues of $500 and costs of $100. The hot stone massages will result in additional revenues of $500 and costs of $300. The relevant (s)pieces of information in this decision is (are) Select one: all the information is relevant none of the information is relevant the additional costs the additional revenues

Fuzhou Spa is considering adding one of two services, seaweed body wraps or hot stone massages. The seaweed body wrap will result in additional revenues of $500 and costs of $100. The hot stone massages will result in additional revenues of $500 and costs of $300. The relevant (s)pieces of information in this decision is (are) Select one: all the information is relevant none of the information is relevant the additional costs the additional revenues

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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All parts are under one question and therefore can be answered in full per your policy. 4. Analysis of a replacement project At times firms will need to decide if they want to continue to use their current equipment or replace the equipment with newer equipment. The company will need to do replacement analysis to determine which option is the best financial decision for the company. Price Co. is considering replacing an existing piece of equipment. The project involves the following: • The new equipment will have a cost of $600,000, and it is eligible for 100% bonus depreciation so it will be fully depreciated at t = 0. • The old machine was purchased before the new tax law, so it is being depreciated on a straight-line basis. It has a book value of $200,000 (at year 0) and four more years of depreciation left ($50,000 per year). • The new equipment will have a salvage value of $0 at the end of the project's life (year 6). The old machine has a current salvage value (at…
Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
4. Pacific Decor, Inc, designs, manufactures,and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much ofthe past month working on the design of a high-end dining room table. The design has been well-received byJose Alvarez, the product development manager. However, Alvarez wants to make sure that the table canbe priced competitively. Amy Hoover, Pacific's cost accountant, presents Alvarez with the following costdata for the expected production of 200 tables: Design cost $ 5,000 Direct materials 120,000 Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead 142,000 64,000 46,500 Marketing 15,000
The cost of introducing the products in selected geographic areas for gauging consumer response is $150K. If the company decides to introduce the product this way, it would need to see the responses to the products before they decide to launch the product line nationally. The probability of a favorable response in the selected geographical areas is estimated at O.60. La Comida can also decide not to go for the launching in the product in selected geographical areas and go ahead with the nationwide launch or not. If La Comida Foods decides to go full-blast in launching the products nationally and are a success, the company estimates that they will gain an annual income of $1.6 million. If the products are not a hit, the company will realize losses to the tune of $700K. La Comida estimates the probability of success for the sauces and marinades to be 0.50, if these are introduced without gauging consumer response.
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Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the machine alone, it will cost $14,000. If they rent the machine together, the cost will decrease to $36,000. Q. Calculate Tate’s and Booth’s respective share of fees using the incremental cost-allocation method assuming (a) Tate is the primary party and (b) Booth is the primary party.
Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: $ 57,100 Materials costs Processing costs $ 37,900 Equipment rental $ 13,300 Occupancy costs $ 22,500 What is the financial advantage (disadvantage) of Alternative B over Alternative A? Multiple Choice O $(23,300) $107,500 $130,800 Alternative A Alternative B $ 41,000 $ 37,900 $(119,150) $ 13,300 $ 15,300
Premo Pens, Inc., is in the process of developing a newpen to replace its existing top-of-the-line Executive Model.Market research has identified the critical features the pen must have, and it is estimated that customers would be will-ing to pay $30 for a pen with these features. Premo’s produc-tion manager estimates that with existing equipment it will cost $26 to produce the proposed model. The current Execu-tive Model sells for $24 and has a total production cost of $20. A competitor sells a pen similar to the proposed model,but without Premo’s patented easy retract feature, for $28. Itis estimated to cost the competitor $25 to produce. If Premoseeks to earn a 20 percent return on sales on the new model,which of the following represents the target cost for the newpen?a. $26.00.b. $22.40.c. $24.00.d. $19.80.