The Operations Manager for a Local Bus Company Wants to Decide

question 33

Multiple Choice

The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows.

If he uses the maximum likelihood criterion, which size bus will he decide to purchase?

• A) Small
• B) Medium
• C) Large
• D) Either small or medium
• E) Either medium or large

---

Definitions:

Management Accountants

Professionals who specialize in providing financial data and analysis to managers within organizations to make informed business decisions.

Cost Accounting

The method of accounting that focuses on capturing a company's total cost of production by assessing its variable and fixed costs.

Managerial Accounting Report

A document that provides detailed financial information intended to help managers in decision-making processes.

Operating Costs

Expenses associated with running a business's core activities, excluding the cost of goods sold.