Use the Following Data to Answer Questions 88-100 -Refer to the Data on Expected Demand for Weston Gadgets,Inc

question 84

Multiple Choice

Use the following data to answer questions 88-100. $$\begin{array}{l} \quad \quad \quad \quad \quad \quad \quad \quad \text { Expected Demand for Weston Gadgets, Inc. }\\\begin{array} { | l | l | l | l | } \hline \text { Decision Alternative } & \text { Low 35\% } & \text { Medium 30\% } & \text { High 35\% } \\\hline \text { Outsource } & \$ 16.00 \text { million } & \$ 28.00 \text { million } & \$ 66.00 \text { million } \\\hline \text { Build capacity } & \$ 4.00 \text { million } & \$ 32.00 \text { million } & \$ 26.00 \text { million } \\\hline \text { Do nothing } & \$ 9.00 \text { million } & \$ 18.00 \text { million } & \$ 66.00 \text { million } \\\hline\end{array}\end{array}$$
-Refer to the data on Expected Demand for Weston Gadgets,Inc.For the various demand scenarios,if you applied the Laplace criterion,what is the lowest payoff?

• A)$46.00 million
• B)$20.67 million
• C)$43.20 million
• D)$33.20 million

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Definitions:

Weighted-Average Method

An inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished products.

Assembly Department

The assembly department is a specific division within a manufacturing facility where components are assembled into finished goods.

Weighted-Average Method

A cost accounting technique that assigns the same average cost to both ending inventory and the cost of goods sold.