The Manager of C & R Clothiers, a Major Manufacturer

question 136

Short Answer

The manager of C & R Clothiers, a major manufacturer of men's shirts, has determined that 3% of C & R's shirts do not meet with company standards and are sold as "seconds" to discount and outlet stores. What is the probability that in a day's production of 200 dozen shirts, less than 12 dozen will be classified as "seconds"?
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Round your answer to four decimal places, if necessary.
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Definitions:

Activity-Based Costing

A strategy for attributing overhead and indirect expenditures to associated services and products, determined by the activities demanded by each.

Estimated Overhead Cost

An approximation of the indirect costs associated with production, used for budgeting and pricing purposes.

Activity Cost Pools

Activity Cost Pools are aggregations of all the costs associated with particular activities used in activity-based costing to allocate overhead costs more accurately.

Predetermined Overhead Rates

Rates used to apply manufacturing overhead to products or job orders, calculated in advance based on estimated overhead costs and activity levels.