This Payoff Matrix Gives Potential Dollar Gain Values in Millions

question 2

Multiple Choice

This payoff matrix gives potential dollar gain values in millions for strategies S1, S2, S3, and S4 for the Bent Fork National Bank and competitive strategies CA1, CA2, and CA3 for the Straight Spoon Bank.If Bent Fork is pessimistic, which strategy will it choose?

• A)S1
• B)S2
• C)S3
• D)S4

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Definitions:

Absorption Costing

A costing technique encompassing all expenses tied to production, including direct materials, direct labor, along with variable and fixed overhead costs, as part of a product's cost.

Variable Costing

An accounting approach where only variable costs are included in the cost of goods sold and fixed overhead costs are treated as period expenses.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed overhead) in the cost of a product.