Answer: A) performance of the contract is commercially impracticable
Explanation:
From the question, we are informed that Adrain operates a recycled metals business and contracts to provide ten tons of scrap steel at $500 per ton to be delivered to Build-It-Rite Materials, Inc, in seven months.
We are further informed that due to an unforeseen shortage of scrap steel, it was impossible for Adrian to fulfill the contract for less than $5,000 per ton.
Therefore, Adrian's best defense against performing the contract would be that performance of the contract is commercially impracticable. Due to the shortage of scrap materials, there will have been an enormous increase in price, which will make the performance of the contract commercially impracticable.
Howard Cho has been hired by Greenwood Enterprises to work on an assembly line in its small engine division. He understands that he will be on probation for 30 days and then must join the union. Cho Enterprise has a(n)_________ shop.
Answer: Union
Explanation:
The options to the question,:
A Open
B. Managed
C. Union
D. Closed
E. Agency
From the question, we are informed that Howard Cho has been hired by Greenwood Enterprises to work on an assembly line in its small engine division and that he understands that he will be on probation for 30 days and then must join the union. This implies that Cho enterprise has a union shop.
A union shop is a form of a union security clause whereby the employer may employ workers who are into the union or those who don't but those that are not yet union members will have to join after a 30 days period.
Harvey is planning to file a case against a petrochemical giant that has a plant in his town. The petrochemical plant is dumping toxic wastes into its surrounding areas. Harvey is mobilizing the residents of the town, all of whom have suffered from various health problems due to the activities of the plant. Which of the following would be of most help to Harvey and the other residents?
A. Affirmative defense
B. Class action
C. Demurrer
D. Directed verdict
Answer:
B. Class action
Explanation:
In this scenario, Harvey is planning to file a case against a petrochemical giant that has a plant in his town because the petrochemical plant is dumping toxic wastes into its surrounding areas. Sequel to this, Harvey is mobilizing the residents of the town, all of whom have suffered from various health problems due to the activities of the plant.
Hence, a class action would be of most help to Harvey and the other residents.
In Law, a class action is a type of lawsuit in which a collective group of people (plaintiffs) having similar injuries or suffering similar damages caused by a particular company's product or action sue the defendant on behalf of a larger group. This simply means that, the group of people (plaintiffs) have a common interest as a result of sharing similar actions from an event.
Hence, the larger group that is being represented by Harvey is referred to as the "class" in business law.
Additionally, it is required by law that the class attest to the fact that they were affected by the actions of the petrochemical plant (defendant).
The following transactions occurred during 2020. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.
Jan. 30 A building that cost $166,320 in 2003 is torn down to make room for a new building. The wrecking contractor was paid $6,426 and was permitted to keep all materials salvaged.
Mar. 10 Machinery that was purchased in 2013 for $20,160 is sold for $3,654 cash, f.o.b. purchaser’s plant. Freight of $378 is paid on the sale of this machinery.
Mar. 20 A gear breaks on a machine that cost $11,340 in 2012. The gear is replaced at a cost of $2,520. The replacement does not extend the useful life of the machine but does make the machine more efficient.
May 18 A special base installed for a machine in 2014 when the machine was purchased has to be replaced at a cost of $6,930 because of defective workmanship on the original base. The cost of the machinery was $17,892 in 2014. The cost of the base was $4,410, and this amount was charged to the Machinery account in 2014.
June 23 One of the buildings is repainted at a cost of $8,694. It had not been painted since it was constructed in 2016.
Prepare general journal entries for the transactions
Answer and Explanation:
1. Accumulated Depreciation Dr, $141,372 ( $166,320 × 5% × 17 years)
Loss on Disposal of Building Dr, $31,194
To Buildings A/c $166,320
To Cash A/c $6,246
(Being cash paid is recorded)
2. Accumulated Depreciation Dr, $14,112 ($20,160 × 10% × 7 years)
Cash Dr, $3,276 ($3,654 - $378)
Loss on disposal of plant assets Dr, $2,772
To Machinery $20,160
(Being loss is recorded)
3. Machinery Dr, $2,520
To Cash $2,520
(Being cash paid is recorded)
4. Machinery Dr, $6,930
Accumulated depreciation - Machinery Dr, $2,646
($4,410 × 10% × 6 years)
Loss on disposal of plant assets Dr, $1,764 ($4,410 - $2,646)
To Cash $6,930
To Machinery $4,410
(Being cash paid is recorded)
5. Maintenance expenses Dr, $8,694
To Cash $8,694
(Being cash paid is recorded)
As a firm buys more capital and less labor, the marginal physical product of capital __________ and the marginal physical product of labor __________, assuming the law of diminishing marginal returns has set in for each factor.
Answer:
As a firm buys more capital and less labor, the marginal physical product of capital ___decreases_______ and the marginal physical product of labor ___increases______, assuming the law of diminishing marginal returns has set in for each factor.
Explanation:
In Economics, the law of diminishing returns states that when one production input is increased while the other input is held constant, the marginal production per the increasing input will decrease relatively to the marginal production of the fixed input.
Effectively, this economic law recognizes that increasing one input while allowing the other inputs to be constant will produce diminishing increase in total output. This law is also called the principle of diminishing marginal productivity. It is very helpful in decision making to enable management balance production inputs in order to achieve maximum outcomes.
The percentage analysis of increases and decreases in individual items in comparative financial statements is called
Answer:
Horizontal analysis
Explanation:
Horizontal analysis is the analysis of financial statements , comparison of financial ratios, or line items over accounting periods.
Define business inventories and explain how they are counted in GDP.
Answer:
Business Inventories refer to the excess of goods produced over goods sold. In a given year, final goods and services are produced for sale so they are consumed. However, not all of these goods are consumed with the rest being consumed in another period. These goods that were not sold for consumption will then fall under Business Inventories.
When accounting for them in GDP, only the increase in Inventory is added. This way the inventory is accounted for in the year that it was produced in. Specifically speaking, Inventories fall under the Investment component of GDP and is typically referred to as Inventory Investment.
Tuliptime, Inc. sold American fashions to a Japanese company at a price of 3.3 million yen. On the sale date, the exchange rate was $0.01 per Japanese yen, but when Tuliptime received payment from its customer, the exchange rate was $0.0103 per yen. When the foreign receivable was collected, Tuliptime:_______A. Credited Sales for $1,170.
B. Credited Gain on Fluctuation of Foreign Currency for $1,170.
C. Debited Loss on Fluctuation of Foreign Currency for $1,170.
D. Debited Cash for $39,000.
Answer:
B. Credited Gain on fluctuation of foreign currency for $1,170
Explanation:
The journal entry to record the collection of foreign receivables is provided
Account Titles and Explanation Debit Credit
Cash 40,170
(3,900,000 * 0.0103)
Foreign reserve 39,000
(3,900,000 * 0.01)
Gain of fluctuation of foreign currency 1,170
(3,900,000 * 0.0003)
Hence, the correct option is Credited Gain on fluctuation of foreign currency for $1,170
Short-run aggregate supply is down sloping because producers supply less at higher prices. is up sloping because producers supply less at higher prices. shows how much Americans are willing and able to consume at each price level. shows the various amounts that producers are willing and able to produce at each price level. is up sloping because consumers demand more at higher prices.
Answer:
The correct answer is the fourth option: Shows the various amounts that producers are willing and able to produce at each price level.
Explanation:
To begin with, the concept of the "aggregate supply" represents in the economy field the total amount of output, understood as goods and services, that producers are willing and able to produce and sell at a stated price level in a certain amount of time. This term also involve three different time situations in which the short run aggregate supply curve is the one that is upward sloping because there is a relationship between the amount of the output that the sellers want to sell and the price of it.
Earnhardt Driving School’s 2018 balance sheet showed net fixed assets of $3 million, and the 2019 balance sheet showed net fixed assets of $3.7 million. The company’s 2019 income statement showed a depreciation expense of $200,000. What was the company's net capital spending for 2019? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Answer:
$800,000
Explanation:
Calculation for Earnhardt Driving School’s net capital spending for 2019
Ending Fixed Assets $3,700,000
Less Beginning Fixed Assets ($3,000,000)
Balance $700,000
Add Depreciation $200,000
Net Capital Spending $800,000
Therefore Earnhardt Driving School’s net capital spending for 2019 will be $800,000
how do you manage different generations?
Explanation:
for the time in history,there are 5 Generations working side-by-side the transitional generation .
The manager of a canned-food processing plant has two labeling machine options. On the basis of a rate of return analysis with a MARR of 20% per year, determine (a)
The manager of a canned-food processing plant has two labeling machine options. on the basis of a rate of return analysis with a marr of 20% per year, determine (a) which model is economically better, and (b) if the selection changes, provided both options have a 4-year life and all other estimates remain the same.
Answer:
The answer is below
Explanation:
First, compare the present values (PV) of all the expenses of all the investments to make an investment decision.
Given the formula of PV = ((C1/(1+r)1) + ((C2/(1+r)2) + ((C3/(1+r)3) +…….+ ((Cn/(1+r)n) + present value of investment – present value of the salvage value
Where, Cn equals to the expense incurred in the nth period and r is the rate of interest per period.
Therefore, for Machine A, present value of the expenses is
= ((1600/(1+0.20)1) + ((1600/(1+0.20)2) + 15,000 – ((3000/(1+0.20)2)
= 1333.33 + 1111.11 + 15000 – 2083.33
= 15361.11
For Machine B, present value of the expenses is
= ((400/(1+0.20)1) + ((400/(1+0.20)2) + ((400/(1+0.20)3) + ((400/(1+0.20)4) + 25,000 - ((4000/(1+0.20)2)
= 333.33 + 277.77 + 25,000 – 2777.77
= 22833.33
Therefore, it is shown that, Machine A is the least cost alternative and should be selected.
According to the liquidity premium theory of the term structure of interest rates, if the one-year bond rate is expected to be 4%, 5%, and 6% over each of the next three years, what is the interest rate on a three-year bond if the liquidity premium on a three-year bond is 0.5%
Answer:
Interest rate on the a three year bond =5.5%
Explanation:
one-year bond rate expected = 4%, 5%, 6% for the next three years
liquidity premium on a three year bond = 0.5%
number of years = 3
The interest rate on the a three year bond can be calculated as
= liquidity premium + ( summation of bond rates for the next three years/number of years )
= 0.5 + ( (4+5+6)/3)
= 0.5 + ( 15/3)
= 0.5 + 5 = 5.5%
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 23 years to maturity, and a coupon rate of 3.8 percent paid annually. If the yield to maturity is 4.7 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer:
Bond Price = 875.0948 euro rounded off to 875.09 euro
Explanation:
To calculate the price of the bond, we need to first calculate the coupon payment per period. We assume that the interest rate provided is stated in annual terms. As the bond is an annual bond, the coupon payment, number of periods and semi annual YTM will be,
Coupon Payment (C) = 1000 * 0.038 = 38 euro
Total periods (n)= 23
r or YTM = 0.047 or 4.7%
The formula to calculate the price of the bonds today is attached.
Bond Price = 38 * [( 1 - (1+0.047)^-23) / 0.047] + 1000 / (1+0.047)^23
Bond Price = 875.0948 euro rounded off to 875.09 euro
The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Department A and on machine-hours in Department B. At the beginning of the year, the Corporation made the following estimates: Department A Department B Direct labor cost $ 60,000 $ 40,000 Manufacturing overhead $ 90,000 $ 45,000 Direct labor-hours 6,000 9,000 Machine-hours 2,000 15,000 What predetermined overhead rates would be used in Department A and Department B, respectively?
Answer:
Instructions are below.
Explanation:
Giving the following information:
Department A:
Direct labor cost= $60,000
Manufacturing overhead= $90,000
Department B:
Manufacturing overhead= $45,000
Machine-hours= 2,000
To calculate the predetermined manufacturing overhead rate we need to use the following formula:
Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
Department A:
Predetermined manufacturing overhead rate= 90,000/60,000
Predetermined manufacturing overhead rate= $1.5 per direct labor dollar
Department B:
Predetermined manufacturing overhead rate= 45,000/2,000= $22.4 per machine-hour
A 1,000 loan is to be repaid with equal payments at the end of each year for 20 years. The principal portion of the 13th payment is 1.5 times the principal portion of the 5th payment. Calculate the total amount of interest paid on the loan
Answer:
$632
Explanation:
using an excel spreadsheet I prepared an amortization schedule
The interest charged was 5.2% per year and the yearly payment will be $81.60. The principal portion of the fifth payment = $36.25 and the principal portion of the thirteenth payment = $54.38 (1.5 times the principal paid at the end of year 5).
total interests paid = $632
A company has net income of $182,000, a profit margin of 10.00 percent, and an accounts receivable balance of $106,201. Assuming 75 percent of sales are on credit, what is the company's days' sales in receivables?
Answer:373
Explanation:
i think it is beause you do youe calater
Suppose that in 2017, a typical U.S. student attending a state-supported college bought 10 textbooks at a price of $110 per book and enrolled in 30 credit hours of coursework at a price of $350 per credit hour. In 2018, the typical student continued to purchase 10 textbooks and enroll in 30 credit hours, but the price of a textbook rose to $120 per book, and the tuition price increased to $390 per credit hour. The base year for computing a "student price index" using this information is 2017.
Required:
What is the value of the student price index in 2017? In 2018? Show your work.
Answer:
2017 Price Index is 1002018 Price Index is 111Explanation:
The Price Index for any given Base year is always 100. 2017 is staed to be the base year so it's price index is 100.
2018
The Student Price Index can be calculated using the formula;
SPI = [tex]\frac{cost of basket of goods in the year of interest}{Cost of the basket of goods in the base year} * 100[/tex]
= [tex]\frac{(10 * 120) + (30* 390)}{(10 * 110) + (30 * 350)}[/tex] * 100
= [tex]\frac{12,900}{11,600} * 100[/tex]
= 111.21
= 111
g "If a product sells for $22, variable costs are $12 and fixed costs are $280,000, what would total sales have to be in order to break-even?"
Answer:
$616,061
Explanation:
The computation of the break even sales is shown below:
As we know that
Break even point = (Fixed expenses) ÷ (Profit volume Ratio)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $22 - $12
= $10
And, Profit volume ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100
So, the Profit volume ratio = (10) ÷ (22) × 100 = 45.45%
And, the fixed expenses is $280,000
Now put these values to the above formula
So, the value would equal to
= ($280,000) ÷ (45.45%)
= $616,061
TRUE OR FALSE FOR BRAINLIEST ANSWER Principals are responsible for the contracts, but not the personal injury claims, created by their agents who are acting within the scope of their authority.
Answer:
FALSE
Explanation:
The principle are liable for the contracts of the agents and if only the agent was authorized by the principal to make a contract, which is expressed ie made in words, written And is implied that is agents is given the rights and not in case of the personal claims made by the agent who is acting on the scope of authority.When preparing Schedule M-1 of Form 1120, which of the following must be added to net income per books to compute taxable income?
a. 100% of meals and entertainment expense
b. Muncipal bond interest
c. Excess of tax vs. book depreciation
d. Accrued bad debts
Answer:
d. Accrued bad debts
Explanation:
The Schedule M-1 of Form 1120 refers to the tax form in which the corporation disclosed its income, expenses and deductions if any by analyzing them in different columns
If there is any difference in the amount the changes could be made in the form
In the given case while computing the taxable income, the accrued bad debts should be added to the net income as per the books
Twenty additional kayakers pay $3,000 ($150 each), in addition to the $4,000 that was paid in advance on July 30, on the day of the clinic. Tony conducts the first kayak clinic. Record the appropriate journal entry.
Answer:
Dr Cash (3,000)
Cr Deferred Revenue (4,000)
Cr Service Revenue (Clinic) (7,000)
Explanation:
Preparation of the appropriate journal entry
Since we were told that kayakers pay the sum of $3,000 at $150 each, by adding to the $4,000 that was already paid in advance on July 30 this means we have to record the transaction by Debiting Cash with the amount of (3,000); Crediting Deferred Revenue with the amount of (4,000) and Crediting Service Revenue (Clinic) with the amount of (7,000)
Note that the credit side of the transaction which is Deferred Revenue of 4,000 -Service Revenue (Clinic) of 7,000 will give us (3,000)
Journal entry
Dr Cash (3,000)
Cr Deferred Revenue (4,000)
Cr Service Revenue (Clinic) (7,000)
At the end of the current year, Accounts Receivable has a balance of $430,000; Allowance for Doubtful Accounts has a credit balance of $4,000; and sales for the year total $1,940,000. Bad debt expense is estimated at 1/4 of 1% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. $ 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ 430,000 Allowance for Doubtful Accounts $ Bad Debt Expense $ 3. Determine the net realizable value of accounts receivable.
Answer:
1. Amount of the adjusting entry for uncollectible accounts:
$4,850
Debit Bad Debts Expense $4,850
Credit Allowance for Doubtful Accounts $4,850
To record bad debts expense for the year.
2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense:
Accounts Receivable:
Balance as per question = $430,000
Allowance for Doubtful Accounts:
Balance as per question = $4,000
Bad Debt Expense - $4,850
Adjusted balance $8,850
Bad Debt Expense:
Adjustment $4,850
3. The net realizable value of Accounts Receivable:
Accounts Receivable balance $430,000
less Allowance for Doubtful $8,850
Net Realizable Value $421,150
Explanation:
a) Bad Debt Expense = ($1,940,000 x 1%)/4 = $4,850
b) The amount of the adjusting entry for uncollectibles is the bad debt expense of $4,850.
c) The Allowance for doubtful accounts will increase by $4,850 to $8,850.
d) The net realizable value of the accounts receivable is the difference between the accounts receivable balance and the allowance for doubtful accounts. This is the estimated value that the company expects to realize after considering the probability of uncollectibles.
As the VP of Global Marketing, what business objective do you want Holden Evan to achieve in Tuatara? Any choice will bring its own challenges and rewards and can lead you to success.
Answer:
The business objective that I want Holden Evan to achieve in Tuatara is to sell their products throughout the Tuatara territory.
Explanation:
As the VP of Global Marketing, the business objective that i want Holden Evan to achieve in Tuatara is to sell their products throughout the Tuatara territory reason been that Holden Evan is a multinational corporation that deal in selling of beauty products as well as other consumer goods and since Tuatara is an emerging market for consumer products, this means that Holden Evan’s main aim and objective in Tuatara territory should be to manufacture and sell their products throughout the Tuatara territory.
The city of Albuquerque, New Mexico, designed a computer-based restaurant recommendation system that helps visitors find a restaurant that needs their particular needs. Visitors answer questions about their preferences for price range, atmosphere, food selections, and location and then receive a list of restaurants that fit those preferences. This is a(n) _______________ system.
Answer:
Expert system
Explanation:
This is an expert system. Such a system is a computer program that follows the behavior of an expert such as helping visitors find a restaurant that needs their particular needs.
Such Expert systems can be useful in solving difficult problems, explaining result, they can be used to learn also.
Assume that on January 1, 2015, a parent purchases a subsidiary with a book value of stockholders’ equity of $1,000,000 for $1,500,000. To finance the purchase, the parent issues 50,000 shares of its $1 par common stock having a market value of $30 per share and exchanges those shares with the sub’s stockholders for all of the sub’s voting shares that they own. At the date of acquisition, the sub’s book values approximated fair values except for two items. PP&E was undervalued by $200,000 and the sub had developed a patent internally that the parent estimates had a fair value of $175,000. The expected useful life of the patent is 10 years and the PP&E has a remaining useful life of 20 years. During the year ended December 31, 2015, the first year after the acquisition, the sub reported sales of $1,500,000; COGS was $900,000 and operating expenses were $390,000. The sub also paid a dividend of $31,500 to the parent. Using the Equity Method to account for the business combination both at, and subsequent to, the acquisition, determine the allocation of the excess fair value and make the appropriate journal entries to record the acquisition and 2015 activity.
Answer:
Journal entries are given below;
Explanation:
January 2015
Investment in Subsidiary (Dr.) $1500,000
Share Capital (Cr.) $50,000
Share Premium (Cr.) $1450,000
To record investment in Subsidiary
Revaluation reserve (Dr.) $200,000
PP&E (Cr.) $200,000
To record devaluation of PP&E
Patent - Intangible Asset (Dr.) $175,000
Revaluation reserve (Cr.) $175,000
To record the patent generated internally
December 2015
Amortization expense (Dr.) $17,500
Intangible Asset (Cr.) $17,500
Dividend Income (Dr.) $31,500
Investment (Cr.) $31,500
During the month of July, Clanton Industries issued a check in the amount of $934 to a supplier on account. The check did not clear the bank during July. In preparing the July 31 bank reconciliation, the company should:
Answer: deduct the check amount from the bank balance
Explanation:
From the question, we are informed that during the month of July, Clanton Industries issued a check in the amount of $934 to a supplier on account but the check did not clear the bank during July.
Since we are told that the check did not clear the bank in July, when preparing the July 31 bank reconciliation, the company should make sure that the amount on the check is deducted from the balance of the bank.
"A 6% corporate bond with 15 years left to maturity is currently trading at 115. The bond is callable in 5 years at 105. If a client buys the bond and then the issuer calls it in 5 years, the yield to call will be:"
Answer:
YTC = 3.72%
Explanation:
YTC = {coupon + [(call value - market value)/n]} / [(call value + market value)/2]
coupon = $1,000 x 6% = $60n = 5 yearscall value = 105% x $1,000 = $1,050market value = 115% x $1,000 = $1,150
YTC = {$60 + [($1,050 - $1,150)/5]} / [($1,000 + $1,150)/2]
YTC = ($60 - $20) / $1,075 = 0.0372 x 100 = 3.72%
One problem that communication, learning, and employee involvement have in minimizing resistance to change is that they:__________.
Answer: D. Are Time Consuming
Explanation:
Communication, Teaching employees and involving them in policies are very useful tools in reducing employee resistance to trade but they can be quite time consuming. Having to communicate explain every change to employees, why it is to be done and how it will be of benefit will take time that could have been spent producing results.
Also involving them in key decision making can have the same temporal effect because the decisions will have to go through more people than before to be approved. The process will become more bureaucratic.
Data from the financial statements of Crafty Crafts and Hobbies, Inc. are presented below (in millions): Crafty Crafts Hobbies, Inc. Total liabilities, 2016 $31,957 $25,461 Total liabilities, 2015 36,104 30,046 Total assets, 2016 46,186 32,872 Total assets, 2015 46,514 35,208 Net sales, 2016 161,466 81,702 Net income, 2016 1,040 1,766 To the nearest hundredth of a percent, what is the 2016 return on assets ratio for Crafty Crafts
Answer:
Crafty Crafts:
Return on Assets Ratio = Net Income/Average Assets x 100
= $1,040/46,350 x 100
= 2.2%
Explanation:
a) Data
Crafty Crafts Hobbies, Inc.
Total liabilities, 2016 $31,957 $25,461
Total liabilities, 2015 36,104 30,046
Total assets, 2016 46,186 32,872
Total assets, 2015 46,514 35,208
Net sales, 2016 161,466 81,702
Net income, 2016 1,040 1,766
b) Average Assets:
Crafty Crafts = (2016 + 2015 assets)/2 = ($46,186 + 46,514)/2 = $46,350
c) The Return on Assets Ratio: This financial performance ratio shows how much of the earnings is generated from the assets of the company in a particular period. It shows the efficiency of management to generate profit from the assets. Usually, the average assets value is used to even the variations over the period.
Ward Doering Auto Sales is considering offering a special service contract that will cover the total cost of any service work required on leased vehicles. From experience, the company manager estimates that yearly service costs are approximately normally distributed, with a mean of $150 and a standard deviation of $25.
a. If the company offers the service contract to customers for a yearly charge of $200, what is the probability that any one customer’s service costs will exceed the contract price of $200?
b. What is Ward’s expected profit per service contract?
Answer:
a. The probability that any one customers service costs will exceed the contract price of $200 is 0.0228
b. Warda expected profit per service contract is $50
Explanation:
a. In order to calculate the probability that any one customers service costs will exceed the contract price of $200 we would have to calculate first the z value as follows:
z=x-μ/σ
z=$200-$150/$25
z=2
Therefore, probability that any one customers service costs will exceed the contract price of $200 is p(x>$200)=p(z>2)
=1-p(z≤2)
=1-0.9772
=0.0228
The probability that any one customers service costs will exceed the contract price of $200 is 0.0228
b. To calculate Warda expected profit per service contract we would have to make the following calculation:
Warda expected profit per service contract=service charge per contract-expected cost
Warda expected profit per service contract=$200-$150
Warda expected profit per service contract=$50
Warda expected profit per service contract is $50