SCENARIO 17-15 The Tree Diagram Below Shows the Results of the Classification

question 52

True/False

SCENARIO 17-15
The tree diagram below shows the results of the classification tree model that has been constructed to
predict the probability of a cable company's customers who will switch ("Yes" or "No") into its
bundled program offering based on the price ($30, $40, $50, $60) and whether the customer spends
more than 5 hours a day watching TV ("Yes" or "No") using the data set of 100 customers collected
from a survey.
-Referring to Scenario 17-15, the highest probability of switching is predicted to
occur among customers who do not watch more than 5 hours of TV a day and are offered the
bundled price of lower than $50.

Understand the basic principles of cost-volume-profit (CVP) analysis.

Identify variable, fixed, and mixed costs and their implication on the break-even point and overall profitability.

Calculate the contribution margin ratio and understand its significance in CVP analysis.

Determine the break-even point in units and dollars.

---

Definitions:

Net Profit Margin Ratio

An indicator of profitability, calculated as net income divided by revenue.

Total Asset Turnover

A financial gauge assessing how well a company employs its assets to create sales turnover.

Cash Dividend

A payout in cash form from a corporation's profits to the individuals holding its shares.

Stockholders' Equity

Stockholders' equity represents the ownership interest of shareholders in the assets of a corporation, after deducting liabilities.