A Business Owner Is Trying to Decide Whether to Buy

question 66

Multiple Choice

A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. $$\begin{array} { l | c r } \text { Alternative } & \text { Brisk } & \text { Slow } \\\hline \text { Buy } & 90 & - 10 \\\text { Rent } & 70 & 40 \\\text { Lease } & 60 & 55\end{array}$$ The maximax strategy is

• A) Buy.
• B) Rent.
• C) Lease.
• D) Brisk.

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Definitions:

Product Costing System

A framework used to determine the expense associated with producing a product, taking into account all direct and indirect costs.

Indications

Suggestions or signals that point towards a specific condition, trend, or action.

Behavioral Implications

The impact that business strategies and practices have on the behavior and motivation of individuals within an organization.

ABC

Activity-Based Costing, a method of allocating overhead and indirect costs to specific products or projects based on the activities that consume resources.