Consider the Following Scenario When Answering the Following Questions

question 72

Multiple Choice

Consider the following scenario when answering the following questions:
Ivett and Desiree are considering playing a game called Twenties versus Fifties.In this game,Ivett will place a $20 bill on the table,and Desiree will place a $50 bill on the table.Both players will then toss a fair coin.If both Ivett and Desiree toss heads or if they both toss tails,Ivett wins the $70 on the table.If one woman tosses heads and the other tosses tails,Desiree wins the $70 on the table.
-Which of the following is the formula that Ivett would use to compute the expected value (EV ) of the game from her perspective?

• A) EV = 0.5 *($20)+ 0.5 * ($50)
• B) EV =0.5 * (-$20)+ 0.5 * ($50)
• C) EV = 0.5 * ($20)+ 0.5 * (-$50)
• D) EV= 0.5 * (-$70)+0.5 * ($50)
• E) EV = 0.5 * ($70)+ 0.5 * ($50)

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Definitions:

Volume Variance

The difference between the planned level of production volume and the actual production volume, often relating to overhead costs.

Predetermined Overhead Rate

The rate used to assign overhead costs to products or services based on a predetermined formula.

Fixed Component

The portion of total costs that remains constant, regardless of changes in activity level.

Variable Overhead

Costs of production that vary with the level of manufacturing activity or output, such as utilities and commissions, as opposed to fixed overhead costs.