East West Distributing Is in the Process of Trying to Determine

question 41

Essay

East West Distributing is in the process of trying to determine where it should schedule next year's production of a popular line of kitchen utensils that it distributes.Manufacturers in four different countries have submitted bids to East West.However,a pending trade bill in Congress will greatly affect the cost to East West due to proposed tariffs,favorable trading status,etc.After careful analysis,East West has determined the following cost breakdown for the four manufacturers (in $1000s)based on whether or not the trade bill passes: ​
a.If East West estimates that there is a 40% chance of the bill passing,which country should it choose for manufacturing?
b.Over what range of values for the "bill passing" will the solution in part (a)remain optimal?
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Definitions:

Fixed Assets

Long-term tangible assets used in the operation of a business that are not expected to be converted into cash in the coming year.

Statement of Cash Flows

A financial document that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Operating Activities

Activities related to the core business operations of a company, such as selling goods and services.

Indirect Method

A financial reporting approach used to prepare the cash flow statement, where net income is adjusted for non-cash transactions, changes in working capital, and other items.