Suppose That the Manager of a Company Has Estimated the Probability

question 31

Multiple Choice

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next three years that will disrupt all suppliers as 2%.In addition,the firm currently uses four suppliers for its main component,and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next three years to be 20%.Supplier management costs during this period are $50,000 per supplier.The financial cost incurred if all four suppliers are disrupted at the same time is estimated to be $10,000,000.What is the expected monetary value (cost) of the current supplier diversification arrangement?

• A)$412,800
• B)$415,680
• C)$10,200,000
• D)$215,680
• E)$8,240,000

Understand the classification of manufacturing costs into direct materials, direct labor, and factory overhead.

Distinguish between the concepts of prime costs and conversion costs.

Recognize the definitions of product costs and period costs, and their implications on financial statements.

Identify the different categories of inventory in the manufacturing process.

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Definitions:

Genes

Units of heredity made up of DNA that are responsible for determining the characteristics of an organism.

Operant Conditioning Procedure

A method of learning that employs rewards and punishments for behavior, encouraging the occurrence of desired behaviors and discouraging undesired ones.

Jump Through Hoop

A metaphorical expression meaning to go through many difficult or unnecessary tasks or obstacles to achieve a goal.

Reinforcers

Stimuli that increase the probability of a behavior being repeated.