Given the following conditional value table, determine the appropriate decision under uncertainty using maximax.

	STATES OF NATURE
ALTERNATIVES	VERY FAVORABLE MARKET	AVERAGE MARKET	UNFAVORABLE MARKET
Build new plant	$\$350,000$	$\$240,000$	-$\$300,000$
Subcontract	$\$180,000$	$\$90,000$	-$\$20,000$
Overtime	$\$110,000$	$\$60,000$	-$\$10,000$
Do nothing	$\$0$	$\$0$	$\$0$

Andrew Thomas, a sandwich vendor at Hard Rock Cafe's annual Rockfest, created a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd):

The probabilities associated with the states of nature are $0.3$ for a big demand, $0.5$ for an average demand, and $0.2$ for a small demand.

Determine the alternative that provides Andrew the greatest expected monetary value (EMV).

Andrew Thomas, a sandwich vendor at Hard Rock Cafe's annual Rockfest, created a table of conditional values for the various alternatives (stocking decision) and states of nature (size of crowd):

The probabilities associated with the states of nature are $0.3$ for a big demand, $0.5$ for an average demand, and $0.2$ for a small demand.

Compute the expected value of perfect information (EVPI).

Selected accounts from Hanna Corporation’s trial balance are as follows. Prepare the assets section of the company’s balance sheet.

$$\begin{array}{c} \textbf{HANNA CORPORATION}\\ \textbf{Trial Balance}\\ \textbf{December 31}\\ \end{array}$$

$$\begin{array}{lcc} \text{(Selected Accounts)}\\ &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{1pt}150,000}\\ \text{Short-term Marketable Securities}&\text{\hspace{5pt}145,000}\\ \text{Accounts Receivable}&\text{\hspace{10pt}26,000}\\ \text{Inventories}&\text{\hspace{10pt}90,000}\\ \text{Other Current Assets}&\text{\hspace{10pt}10,000}\\ \text{Land}&\text{\hspace{5pt}350,000}\\ \text{Equipment}&\text{\hspace{5pt}145,000}\\ \text{Accumulated Depreciation: Equipment}&&\text{\$\hspace{1pt}10,000}\\ \text{Goodwill}&\text{\hspace{10pt}40,000}\\ \text{Other Intangible Assets}&\text{\hspace{10pt}20,000}\\ \end{array}$$

William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D = 19,500 units/year Ordering cost S = $25 order Holding cost H =$4/unit/year What are the annual holding costs for the workbooks?

William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D = 19,500 units/year Ordering cost S = $25 order Holding cost H =$4/unit/year What are the annual ordering costs?

Selected accounts from Han Corporation’s trial balance are as follows. Prepare the detailed schedule showing the Property, Plant, and Equipment.

$$\begin{array}{c} \textbf{HAN CORPORATION}\\ \textbf{Trial Balance}\\ \textbf{December 31}\\ \end{array}$$

$$\begin{array}{lcc} \text{(Selected Accounts)}\\ &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{1pt}150,000}\\ \text{Short-term Marketable Securities}&\text{\hspace{5pt}145,000}\\ \text{Accounts Receivable}&\text{\hspace{10pt}26,000}\\ \text{Inventories}&\text{\hspace{10pt}90,000}\\ \text{Other Current Assets}&\text{\hspace{10pt}10,000}\\ \text{Land}&\text{\hspace{5pt}350,000}\\ \text{Buildings}&\text{\hspace{5pt}300,000}\\ \text{Accumulated Depreciation: Buildings}&&\text{\$\hspace{1pt}40,000}\\ \text{Equipment}&\text{\hspace{5pt}145,000}\\ \text{Accumulated Depreciation: Equipment}&&\text{\hspace{5pt}10,000}\\ \text{Goodwill}&\text{\hspace{10pt}40,000}\\ \text{Other Intangible Assets}&\text{\hspace{10pt}20,000}\\ \end{array}$$

A delivery company is considering adding another vehicle to its delivery fleet; each vehicle is rented for $\$100$ per day. Assume that the additional vehicle would be capable of delivering 1,500 packages per day and that each package that is delivered brings in ten cents in revenue. Also assume that adding the delivery vehicle would not affect any other costs.

a. What is the MRP? What is the MRC? Should the firm add this delivery vehicle?
b. Now suppose that the cost of renting a vehicle doubles to $\$200$ per day. What are the MRP and MRC? Should the firm add a delivery vehicle under these circumstances? c. Next suppose that the cost of renting a vehicle falls back down to $\$100$ per day but, due to extremely congested freeways, an additional vehicle would only be able to deliver 750 packages per day. What are the MRP and MRC in this situation? Would adding a vehicle under these circumstances increase the firm’s profits?

The fire department has a number of failures with its oxygen masks and is evaluating the possibility of outsourcing preventive maintenance to the manufacturer. Because of the risk associated with a failure, the cost of each failure is estimated at $\$ 2,000$. The current maintenance policy (with station employees performing maintenance) has yielded the following history:

This manufacturer will guarantee repairs on any and all failures as part of a service contract. The cost of this service is $\$ 5,000$ per year.

What is the cost of the current maintenance policy?

The fire department has a number of failures with its oxygen masks and is evaluating the possibility of outsourcing preventive maintenance to the manufacturer. Because of the risk associated with a failure, the cost of each failure is estimated at $2,000. The current maintenance policy (with station employees performing maintenance) has yielded the following history:

This manufacturer will guarantee repairs on any and all failures as part of a service contract. The cost of this service is$5,000 per year. What is the more economical policy?

Use Top-Light Corporation's trial balance and financial statements from the previous Problems. A general journal is given in the Working Papers.

Record the following closing entries on page 21 of the general journal.

Close the income statement accounts with credit balances.

William Beville's computer training school, in Richmond, stocks workbooks with the following characteristics: Demand D = 19,500 units/year Ordering cost S = $25 order Holding cost H =$4/unit/year Calculate the EOQ for the workbooks.

Which of the following costs are variable?

a. only 2
b. only 1
c. 1 and 4
d. 1 and 2

Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was$15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the asset’s life, and create the journal entry for year five.