You Are Trying to Decide in Which of the Three

question 3

Multiple Choice

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.4, which of the following statements are correct?
i. The Expected Opportunity Loss for Company A is $120.
ii. The Expected Opportunity Loss for Company B is $120.
iii. The Expected Opportunity Loss for Company C is $440.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) is a correct statement but not (ii) or (iii).
• C) (ii) is a correct statement but not (i) or (iii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

---

Definitions:

Machine-Hours

A unit of measure indicating the operational time of machinery, often used in manufacturing to allocate costs based on machine usage.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, calculated at the beginning of a period.

Machine-Hours

The total hours that production machinery is operated within a given period, rephrased as the aggregate operational time of production equipment.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.