In Response to a Major Competitor,a Local Pizza Company Begins

question 119

Short Answer

In response to a major competitor,a local pizza company begins to pay $5 to customers whose home delivered pizza did not arrive within 30 minutes after the order was placed.Assuming that the probability of a randomly selected customer having to wait more than 30 minutes is 0.01 and that 1000 customers are served tomorrow,what is the probability that the total amount paid out tomorrow will be $100 or more?

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Definitions:

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific business segment, product, or operation without any ambiguity.

Net Operating Income

The total profit of a business after operating expenses are deducted but before interest and taxes are subtracted.

Price Hike

An increase in the price of goods or services, often due to factors such as inflation, increased demand, or rising input costs.

Target Costing

A pricing strategy in which a product's selling price is determined by market conditions, and the production cost is managed to ensure profitability.