Laplace criterion of rationality, Managerial Accounting

Assignment Help:

Laplace Criterion of Rationality

This criterion holds that if decision makers do not know the probabilities of the various states of nature and have no reason to think otherwise, then the states of nature should be considered to be equally likely. On the basis of this supposition, the predictable monetary value for each alternative is calculated and the alternative with the highest expected monetary value is chosen.

204_Untitled.jpg


Workings:

EMV Sh.4 = 1/3 (12000) + 1/3 (8000) + 1/3 (0) = 6667
Others are computed in the same way.

Decision:

Set a price of Sh.4.00 since it maximizes the expected monetary value.

 


Related Discussions:- Laplace criterion of rationality

What is ratio analysis, Ratio analysis A ratio is a simple arithmetical...

Ratio analysis A ratio is a simple arithmetical expression of the relationship of one number to another. It may be explained as the indicated quotient of two mathematical ex

How would you characterize the politics of food, Given the persistent probl...

Given the persistent problem with starvation in some parts of the world, and the anticipated population growth in developing nations, do we need genetically modified foods? Is it r

Impact of Cost Structure., You are required to provide a report of approx 5...

You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF forma

Strategic plan, How to write introduction on strategy plan

How to write introduction on strategy plan

Hire purchase and leasing, This is a most familiar form of medium term fina...

This is a most familiar form of medium term financing in obtaining plant and vehicles, machinery etc. In hire purchase transactions, the purchaser of goods will obtain the possessi

Rates, What is your base rate for graduate level accounting? If I decide to...

What is your base rate for graduate level accounting? If I decide to use your service can the tutor and I speak via skype? I''m not located in the U.S.

Define materials cost variance, Define Materials cost variance Material...

Define Materials cost variance Material cost variance (MCV) is the difference between the standard cost of material specified and the actual cost of materials used." It is the

Simulation models, SIMULATION MODELS Simulation is a method of analyzin...

SIMULATION MODELS Simulation is a method of analyzing a system by experimentally duplicating its behavior. Management accountants can be able to make meaningful inferences conc

Cost analysis., monetaryor non monetary which will arise as aresult of impl...

monetaryor non monetary which will arise as aresult of implemenntinng the project

What is meant by the term open book management, What is meant by the term O...

What is meant by the term Open Book Management? How does Open Book Management improve the organizations ability to achieve and improve results?

Write Your Message!

Captcha
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