A Company Is Preparing a Bid on a Government Contract

question 128

Multiple Choice

A company is preparing a bid on a government contract for 40 units of a certain product. The operations manager estimates the assembly time required for the first two units to be 10.4 hours and 8.8 hours.If a contract for 30 units is canceled after the first 20 units, approximately how much of the expected total direct labor will have been expended to that point?

• A)73 percent
• B)55 percent
• C)61 percent
• D)50 percent
• E)It is impossible to say without additional information.

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Definitions:

Diversifiable Risk

A risk that can be reduced or mitigated through the diversification of investments in a portfolio.

Government Regulation

Laws and rules established by governmental agencies aimed at controlling the way businesses can operate within the economy.

Systematic Risk

A hazard inherent to the entire market or a market segment, which diversification cannot diminish.

Unsystematic Risk

Refers to the risk that is specific to a company or industry, and can be mitigated through diversification.