A Company Has 2 Machines That Produce Widgets

question 44

Multiple Choice

A company has 2 machines that produce widgets. An older machine produces 23% defective widgets, while the new machine produces only 8% defective widgets. In addition, the new machine produces 3 times as many widgets as the older machine does. Given a randomly chosen widget was tested and found to be defective, what is the probability it was produced by the new machine?

• A) 0.511
• B) 0.489
• C) 0.15
• D) 0.08

Recognize the differences between planning and flexible budgets.

Determine the impact of activity levels on total fixed, variable, and total costs.

Analyze the budgeting process for different time frames and operational aspects.

Apply knowledge of budgeting to make financial decisions.

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Definitions:

Net Loss

The amount by which total expenses exceed total revenues in a specific period, indicating a negative financial performance.

X-Inefficiency

The difference between efficient behavior of businesses theoretically assumed or envisaged and their observed behavior in reality due to a lack of competitive pressure.

Competitive Firms

Businesses operating in a market where they must compete with others for the same customers, without having significant control over market prices.