Answer the Following Questions Using the Information Below:
Alice Water

question 19

Multiple Choice

Answer the following questions using the information below:
Alice Water Coolers is approached by Mrs Hu Qi,a new customer,to fulfil a large one-time-only special order for a product similar to one offered to regular customers.Alice Water Coolers has excess capacity.The following per unit data apply for sales to regular customers:
$$\begin{array} { l r } \text { Direct materials } & \$ 250 \\\text { Direct manufacturing labour } & 80 \\\text { Variable manufacturing support } & 50 \\\text { Fixed manufacturing support } & \underline { 100 } \\{ \text { Total manufacturing costs } } & 480 \\\text { Mark-up (30\%) } & \underline { 144 } \\\text { Estimated selling price } & \underline {\$ 624}\end{array}$$
-If Mrs Hu Qi wanted a long-term commitment for supplying this product,what price would MOST likely be quoted to her?

• A)$330
• B)$380
• C)$480
• D)$624

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Definitions:

True Probabilities

The actual likelihood of an event occurring, as opposed to estimated probabilities based on theoretical models or assumptions.

Information Processing

The process of gathering, storing, and manipulating data to produce meaningful information.

Fully Rational

Describes an economic theory assumption that individuals always make decisions that provide them with the highest amount of personal satisfaction or utility, based on full knowledge and a consistent evaluation of available information.

Behavioral Biases

Psychological tendencies that cause individuals to act in predictably irrational ways, often impacting financial and investment decisions.