TABLE 5-8 Two Different Designs on a New Line of Winter Jackets

question 71

Short Answer

TABLE 5-8
Two different designs on a new line of winter jackets for the coming winter are available for your manufacturing plants. Your profit (in thousands of dollars) will depend on the taste of the consumers when winter arrives. The probability of the three possible different tastes of the consumers and the corresponding profits are presented in the following table.

-Referring to Table 5-8, if you decide to choose Design A for half of the production lines and Design B for the other half, what is the risk of your investment?

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Definitions:

Equipment

Assets used in the operation of a business or manufacturing process, which have a long-term use and value.

Income Ratio

A financial metric that compares various incomes to a particular benchmark, such as net income to sales or investment income to total assets.

Sharing Income

The distribution of profits among partners or shareholders in a business, often according to the proportion of ownership.

Current Asset

An asset likely to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.