What is the maximum profit possible on each product

Assignment Help Financial Accounting
Reference no: EM13340527

CVP under uncertainty: discrete probability distribution for sales

Management is considering producing one of two proposed new products, Product A or Product B.  Both products have the same unit contribution margin of $4 and the same incremental fixed costs of $400 000 per annum. Sales volumes, however, are uncertain, but the following probability distributions of sales have been estimated:

 

Sales

Units

Probability Distribution

Product A

Probability Distribution

Product B

50 000

0.1

0.2

75 000

0.2

0.3

100 000

0.3

0.2

125 000

0.3

0.1

150 000

0.1

0.1

225 000

0

0.1

 

Required:

(a)  Calculate the breakeven sales units for each product. (b)  Calculate the expected sales for each product.

(c)  Calculate the expected profit for each product.

(d)  What is the probability of making a loss on (i) Product A? (ii) Product B? (e)  What is the probability of making a profit on (i) Product A? (ii) ProductB?

(f)   What is the maximum profit possible on each product?

(g)  Would management be indifferent between selecting either product?

Explain your answer.

 

Reference no: EM13340527

Questions Cloud

Calculate the width of the central maximum : A slit of width 0.26mm is illuminated with monochromatic light of wavelength 540nm , and a diffraction pattern is formed on a screen 1.5mfrom the slit. What is the width of the central maximum
Explain acid beyond the equivalence point : the pH at the equivalence point and the pH after adding 6.0 mL of acid beyond the equivalence point
What is the speed of all ten cars after the collision : Each railroad car has a mass of 91000 kg. Seven coupled railroad car moving with a speed of 4.9 m/s collide, What is the speed of all ten cars after the collision
What is the moment of inertia of the earth : The Earth can be approximated as a sphere of uniform density, rotating on its axis once a day. What is the moment of inertia of the Earth
What is the maximum profit possible on each product : What is the probability of making a loss on (i) Product A? (ii) Product B? (e)  What is the probability of making a profit on (i) Product A? (ii) ProductB?
Explain a balanced chemical equation for the reaction : Which of the available reagent(s), if any, will oxidize Fe(s) while leaving Cu(s) unreacted? If none of the available reagents can be used for this purpose, then identify another reagent from the table that could be used. For each reagent you've i..
Compute the fans angular velocity : An electric ceiling fan is rotating about a fixed axis with an initial angular velocity magnitude of 0.210rev/s. Compute the fan's angular velocity magnitude after time 0.205s has passed
Calculate a third breakeven point : Assume that there is no specific sales mix.  Write the breakeven equation and graph it.  Name two breakeven points, and calculate a third breakeven point which is a linear combination of the two, using g = 0.25.  Prove that your third point is in..
What is its peak magnetic field strength : On its highest power setting, a microwave oven increases the temperature of 0.390 kg of spaghetti by 45.0°C in 150 s. What is its peak magnetic field strength

Reviews

Write a Review

Financial Accounting Questions & Answers

  Create normal costing journal entries

Create normal costing journal entries for each of the subsequent events. You will also need the subsequent information: Overhead was evaluated at $50,000 for the year and direct labor hours

  Evaluate the cost of job order costing system

Evaluate the Cost of Job order costing system and The company made the following estimates at the beginning of the current year.

  Compute the contribution margin ratio

the company sold 200 more flash drives than planned. What is the expected effect on profit of selling the additional drives? Compute the contribution margin ratio associated with one flash drive.

  Draw journal entries to record these events

1,500 Memberships were sold to the public in the amount of $40 each. Membership provides the individual with a monthly magazine and other benefits. The estimated fair value of member benefits is $25. The member year runs from July 1 to June 30.

  What action is required if the error is not discovered

What action is required? Ignore taxes. What action is required if the error is not discovered until 4 years after it occurred?

  Find the forecast for robert''s year-end net income

The tax rate is expected to remain at 40 percent and On the basis of this information, what will be the forecast for Robert's year-end net income?

  Be sure to label your graph carefully and accurately

Graph the consumer’s Price consumption curve for prices, PX = $1, PX =$ 2, and PX = $3. Be sure to label your graph carefully and accurately

  Which financial statement does the input come from

Name one and explain how it is computed? Which financial statement(s) does input come from? Most importantly, what does it tell you about the financial performance or health?

  What is the depreciation expense for the current year

The truck is expected to last six years and has a salvage value of $2,200. The company's annual accounting period ends on December 31. What is the depreciation expense for the current year, assuming the straight-line method is used?

  What is tachibana corporation taxable income

entertainment expenses, $3,000 for premiums on officers' life insurance policies (the corporation is the beneficiary for these policies), and $100 for fines. What is Tachibana Corporation's taxable income?

  Calculate the amount of interest capitalized for the year

Calculate the amount of interest capitalized for the year. (Round the Weighted-average rate to two decimal places (e.g. 12.34%) for calculation purposes. Round your final answer to the nearest dollar amount. Enter your answer in dollars not in mi..

  Should baldo sell gammazine or deltazine

Gammazine can be sold for $9/gallon, or it can be processed into deltazine. Deltazine can be sold for $12/gallon. Additional processing costs for a batch of deltazine are $15,500. Should Baldo sell gammazine or deltazine? Explain.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd