The Following Is an Opportunity-Loss Table

question 38

Multiple Choice

The following is an opportunity-loss table. The probabilities for the states of nature A,B,and C are 0.3,0.5,and 0.2,respectively.If a person were to use the expected opportunity loss criterion,what decision would be made?

• A)Alternative 1
• B)Alternative 2
• C)Alternative 3
• D)State of Nature C
• E)State of Nature B

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Definitions:

Direct Materials Quantity Variance

The difference between the actual amount of direct materials used in production and the standard amount expected to be used, valued at the standard cost.

Overhead

Ongoing business expenses not directly attributed to creating a product or service, such as rent, utilities, and administrative costs.

Standard Labor Hours

The predetermined amount of time expected to complete a task or produce a unit of goods under normal conditions.

Manufacturing Cost Variance

The difference between the actual manufacturing costs and the standard or budgeted costs.