For Each of the Following Decisions,which Alternative Would You Choose

question 59

Essay

For each of the following decisions,which alternative would you choose?
1)In the final seconds of a game against a traditional rival,the coach of a university football team may choose a play that has a 95 per cent chance of producing a tied score,or one with a 30 per cent chance of victory,but certain defeat if it fails.
2)The president of a major New Zealand company must decide whether to build a new plant within New Zealand that has a 90 per cent chance of producing a modest return on investment,or to build it in a foreign country with an unstable political history.The latter alternative has a 40 per cent chance of failing,but the returns would be enormous if it succeeded.
3)A university student with considerable acting talent must choose a career.She has the opportunity to go on to medical school and become a physician,a career in which she is 80 per cent likely to succeed.She would rather be an actress,but realises that the opportunity is only 20 per cent.

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Definitions:

Customer Specifications

Detailed requirements provided by a customer regarding how a product or service should perform or be designed.

Job Order Cost System

A type of cost accounting system that provides for a separate record of the cost of each quantity of product (job) that is manufactured.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the expenses necessary to convert raw materials into finished goods.

Direct Materials

Raw materials that can be directly associated with the production of goods or services and are considered a variable cost.