Decision Trees Show the Profit Outcomes for the Plans for Two

question 94

Multiple Choice

Decision trees show the profit outcomes for the plans for two doughnut stores in a strong and a weak economy for the future.Which store is expected to have the greater expected profit?

• A)Store 1 has a $27,900 greater profit.
• B)Store 1 has a $1200 greater profit.
• C)Store 2 has a $26,700 greater profit.
• D)Store 2 has a $1200 greater profit.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as materials and labor directly involved in manufacturing a product.

Units

A measure of quantity used to express the amount of a product, service, or resource, often used in production and inventory contexts.

Pretax Income

Income earned by a company before taxes have been deducted.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and sales commissions.