Interpret the Mean of a Discrete Random Variable as an Expected

question 81

Multiple Choice

Interpret the Mean of a Discrete Random Variable as an Expected Value
-A lab orders a shipment of 100 rats a week, 52 weeks a year, from a rat supplier for experiments that the lab conducts. Prices for each weekly shipment of rats follow the distribution below:
$\begin{array}{l|ccc}\text { Price } & \$ 10.00 & \$ 12.50 & \$ 15.00 \\\hline \text { Probability } & 0.2 & 0.3 & 0.5\end{array}$

How much should the lab budget for next year's rat orders assuming this distribution does not change. (Hint: find the expected price.)

• A) \(\$ 689.00\)
• B) \(\$ 13.25\)
• C) \(\$ 1325.00\)
• D) \(\$ 3,582,800.00\)

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Definitions:

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the standard cost allocated, based on the actual production volume.

Materials Quantity Variance

A financial measure that captures the difference between the actual amount of materials used in production and the standard amount expected, multiplied by the standard cost of those materials.

Variable Overhead Rate Variance

The difference between the actual overhead rate incurred and the standard overhead rate that was expected, multiplied by the actual hours worked.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for allocating manufacturing overhead.