Scenario: 500 units of a product are being manufactured and the question to be answered is whether or not to perform a particular test on those units before shipping. The test costs $10,000 per unit to perform. The cost not to perform the test is $0 per unit, but if a unit fails in the field then it will have to be fixed in the field, which has a cost of $350,000 per unit.
If the units are tested, for the units that pass the test, there is now an additional cost of re-readying the units for delivery of $2,000 per unit. For the units that fail the test, there is now an additional cost of $21,000 to fix the units, as well as the $2,000 per unit cost of re-readying them for delivery, for a $23,000 total cost per unit.
Historically you know and can count on the fact that 96% of your products will pass the testing. The same pass/fail rate for testing applies to the pass/fail rate observed in the field.
To fully complete this assignment, you need to answer or perform the following:
The math and resulting values you are expected to fill in to show the completion of the decision tree.
Be sure to fill in the last two values: what is the Expected Monetary Value for both performing the test and not performing the test?
Which choice should be made? Be sure to include with your submission an answer to whether the test should be performed or not, and give a short answer why.

Answers

Answer 1

Answer:

7000

Explanation:

Answer 2

The better choice is to not perform the test. This decision is based on the higher expected monetary value, indicating that not performing the test is more financially favorable in this scenario.

How did we arrive at this assertion?

To make an informed decision, we'll calculate the Expected Monetary Value (EMV) for both performing the test and not performing the test.

For performing the test:

EMV = (Probability of passing * (Revenue - Test Cost)) + (Probability of failing * (Revenue - Test Cost - Fixing Cost - Re-readying Cost))

EMV = (0.96 * ($350,000 - $10,000)) + (0.04 * (-$350,000 + $23,000))

For not performing the test:

EMV = (Probability of passing in field * Revenue) + (Probability of failing in field * Fixing Cost)

EMV = (0.96 * $350,000) + (0.04 * $350,000)

Now we'll calculate the values:

EMV for performing the test = (0.96 * $340,000) + (0.04 * -$327,000) = $326,400

EMV for not performing the test = (0.96 * $350,000) + (0.04 * $350,000) = $350,000

Based on the calculations, the EMV for not performing the test is higher ($350,000) than performing the test ($326,400).

Therefore, the better choice is to not perform the test. This decision is based on the higher expected monetary value, indicating that not performing the test is more financially favorable in this scenario.

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Related Questions

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Answer:

B - bachelor’s degree or apprenticeship

Explanation:

Pls choose brainliest!

A demand curve shows the graphical relationship between price and services

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It should be noted that demand curve shows the graphical relationship between price and services as well as quantity demanded.

What is a demand curve?

The demand curve can be regarded as  economic graphical representation ,which display relationship between the price and quantity demanded.

This demand curve is very crucial in economics because it helps in economic analysis.

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Sorry I don’t get it??

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Explanation:

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Answer:

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what is 6.3% of 4334?​

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Answer:The final answer would be 273.042Hope this helps!! <3

Hi ;-)

[tex]6,3\%=6,3\%:100\%=0,063\\\\6,3\% \ of \ 4334=0,063\cdot4334=\boxed{273,042}[/tex]

For an economy, operating outside the production possibilities frontier:

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For operating outside the production possibilities frontier, the economy should not be possible with the present resources & technology.

The information related to the production possibilities frontier should be considered:

It represents the possible combinations of goods that are manufactured with the available resources.If the combinations are on the PPF so it is feasible & efficient.If the combination is not on the PPF i.e. outside so it can't be feasible.If the combination is inside on the PPF so it is feasible but not efficient.

Therefore we can conclude that For operating outside the production possibilities frontier, the economy should not be possible with the present resources & technology.

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Consolidation Rules Under GAAP

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How do you abide by company rules and regulations

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Answers

Answer:

The answer that you need is: MTS

Make-to-stock is the manufacturing strategy that has the shortest / fastest lead time (i.e., the manufacturing strategy that will provide product to customers the quickest).

What is Make-to-stock?

Make-to-stock (MTS) is a manufacturing technique where production scheduling and planning are based on anticipated demand for the product. Orders placed during one manufacturing period are filled using products produced during the following production period.

A common production method called "Make to Stock" (MTS) has businesses make goods in big quantities in response to anticipated consumer demand. MTS mandates that businesses maintain finished goods inventories in order to deliver them to customers at the time of purchase.

Hammer Strength MTS is a selectorized body that naturally moves the renowned Hammer Strength Plate Loaded items. MTS is frequently used as an additional product line to supplement conventional selectorized items with a distinctive appearance.

Thus, it is Make-to-stock.

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A project will reduce costs by $41,500 but increase depreciation by $20,300. What is the operating cash flow if the tax rate is 40 percent?

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Answer:

hevelle, Inc., has sales of $39,500, costs of $18,400, depreciation expense of $1,900, and interest expense of $1,400If the tax rate is 35 percent, what is the operating cash flow?Operating Cash FlowTo calculate operating cash flow (OCF), we want to calculate revenues minus costs, but we don't want to include depreciation because it's not a cash outflow, and we don't want to include interest because it's a financing expense. We do want to include taxes because taxes are (unfortunately) paid in cash.EBIT = Earnings before interests and taxesIncome Statement:Sales 39,500Costs 18,400Depreciation 1,900EBIT= Sales – Costs – Depreciation = 19,200Interest1,400Taxable Income = EBIT – interest = 17,800Taxes (35%)  Taxable income X Tax Rate % = 6,230Net Income Taxable income – taxes = 11,570

Explanation:

hevelle, Inc., has sales of $39,500, costs of $18,400, depreciation expense of $1,900, and interest expense of $1,400If the tax rate is 35 percent, what is the operating cash flow?Operating Cash FlowTo calculate operating cash flow (OCF), we want to calculate revenues minus costs, but we don't want to include depreciation because it's not a cash outflow, and we don't want to include interest because it's a financing expense. We do want to include taxes because taxes are (unfortunately) paid in cash.EBIT = Earnings before interests and taxesIncome Statement:Sales 39,500Costs 18,400Depreciation 1,900EBIT= Sales – Costs – Depreciation = 19,200Interest1,400Taxable Income = EBIT – interest = 17,800Taxes (35%)  Taxable income X Tax Rate % = 6,230Net Income Taxable income – taxes = 11,570

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Qkwjns dhanwnqkwnsnwkwjwnwnkOjabwnjan

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Explanation:

when it comes to Nigeria think oil

it's a very big oil country

What is meant by the word business

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Answer:

Business is a commercial activity or a persons regular occupation , profession or trade.

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The looting of shops and malls will affect business in terms of social and triple bottom line relationship.

Triple bottom line is a business concept in  which businesses focus and look for the impact on social and environment by their business activities.

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The businessmen will feel insecure in the state and will be afraid of investing more money into business.

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the answer is 9 your welcome
The answer will be 7



Because there are 5 dolls and someone gives u 2 more that will be 7




Hope this helps!

You are the manager of the best-performing subsidiary in an MNE. Because bonuses are tied to subsidiary performance, your bonus is the highest of all subsidiary managers. Now headquarters is organizing managers from other subsidiaries to visit and learn from your subsidiary. You worry that if performance at other subsidiaries catches up, your subsidiary will no longer be the star unit and your bonus will go down. What are you going to do?

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I am the bonus and will try hard to be the bonus to be bonus

Using the following information: The bank statement balance is $5,086. The cash account balance is $5,263. Outstanding checks amounted to $894. Deposits in transit are $1,007. The bank service charge is $55. A check for $51 for supplies was recorded as $42 in the ledger. Prepare a bank reconciliation for Candace Co. for May 31.

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Answer:

Bank statement Balance = $5086

Cash Account Balance = $5263

Outstanding Checks. = $894

Deposit In Transit. = $1007

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A Check. = $51

Check For Supplies. = $42

Adjusted Cash Balance. = $12398

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organization use it?
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Answer:

syntific mamagement loss it relevance its relevs today it will might today it will not lost revalance

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b) false

Answers

Answer:

true

Explanation:

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Your firm wants to borrow $1 million and repay this loan in 10 equal annual installments. The first installment will be one year from now. The bank charges an interest rate of 10%. What will your annual installment be? (Hint: the present value of your payments using a discount rate of 10% should equal the amount you borrow) Enter the answer with two decimal points

Answers

Answer:

110,000 dollars a year for ten years

Explanation;

100,000 x .10 = 10,000

10,000 + 100,000 = 110,000

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What is the Amount?

The size or quantity of non-count nouns is indicated by the word "amount." You can count the volume of air in a bottle or the volume of water in a beaker, for instance. The amount can be a noun or a verb, as was said above. Use of the noun: Add a little water to the dish. The dogs require various amounts of food, noun use. It is three bucks and change, to be exact.

EMI = [P x R x (1+R)N]/[(1+R)N-1] is the formula for computing EMIs. P denotes the loan amount or principle, R denotes the monthly interest rate (for example, if the annual interest rate is 11%, the monthly interest rate will be 11/(12 x 100)), and N denotes the number of monthly payments.

100,000 x .10 = 10,000

10,000 + 100,000 = 110,000

Therefore, The sum you borrow) Type the Amount response using two decimal places.

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A strategy to earn foreign exchange by making domestic industries competitive in the international market is called: a. Export promotion b. Import substitution c. Inward looking trade policy d. Both (b) and (c)​

Answers

Answer:

a

Explanation:

It's export promotion

p.s. give me the brainliest answer

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Answer:

Appliances containing 5 pounds or less of refrigerant that have been hermetically sealed and charged at the factory.

appliances that have been hermetically sealed and charged at the manufacture and contain 5 pounds or less of refrigerant.

What is Type I examination?

1. EU type-examination is the process by which a notified body determines and certifies that a device, including its technical documentation, pertinent life cycle processes, and an associated representative sample of the device production planned, satisfies the pertinent requirements of this Regulation.

2. The EPA has created four different certifications: in order to maintain tiny appliances (Type I). except for small appliances and MVACs, for the maintenance or disposal of high- or extremely high-pressure appliances (Type II). For maintaining or getting rid of low-pressure equipment (Type III).

Appliances of Type I are hermetically sealed. This denotes that internal components are both airtight and sealed against the elements. Consider this to be your phone. Your phone's internal circuitry and other components are enclosed in a tidy device.

Thus, appliances that have been hermetically sealed

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Simba Company’s standard materials cost per unit of output is $9.68 (2.20 pounds x $4.40). During July, the company purchases and uses 2,970 pounds of materials costing $15,741 in making 1,500 units of finished product. Compute the total, price, and quantity materials variances

Answers

Total materials variances = 1,221
Unfavorable price variance = 2,673
Unfavorable quantity variance = 1,452
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a. True
b. False

Answers

Answer:

b.False

Explanation:

It is not scientifically proven because both can do depending on your work ethic

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Explanation:

The answer is A because We paid a creditor 60 by cheque because if we pay by cheque our back reduces and our creditors reduce.

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Revenue losses because of the various tax exemptions and incentives.Many traders are interested in SEZ, so that they can acquire at cheap rates and create a land bank for themselves.The number of units applying for setting up EOU's is not commensurate to the number of applications for setting up SEZ's leading to a belief that this project may not match up to expectations.

You bought two new CDs with the last $30 in your checking account, and your next payday is on Monday. What is the opportunity cost of these CDs?"
Group of answer choices

the satisfaction of knowing you are the first of your friends to have these CDs

the difference between the cost to produce the CDs and the price you paid for them

the night out with your friends that you miss because you can?t afford it now

the $30 check that you wrote for the CDs

Answers

Answer:

the $30 check that you wrote for the cds

The discount rate is the interest rate charged by:_______.
a. banks for overnight loans to other banks.
b. the Fed on loans of reserves to banks.
c. major banks to their best customers.
d. banks for loans of less than 24 hours.

Answers

Answer:

B

Explanation:

I believe it is the interest rate the federal reserve uses for loaning to banks. Its the minimal rate, also.

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