Question
In: Economics
Keystone Manufacturing, Inc., is analyzing a new bid to supply the company with electronic control systems....
Keystone Manufacturing, Inc., is analyzing a new bid
to supply the company with electronic control systems. Alpha
Corporation has been supplying the systems and Keystone is
satisfied with its performance. However, a bid has just been
received from Beta Controls, Ltd., a firm that is aggressively
marketing its products. Beta has offered to supply systems for a
price of $120,000. The price for the Alpha system is $160,000. In
addition to an attractive price, Beta offers a money-back
guarantee. That is, if Beta=s systems do not match Alpha=s quality,
Keystone can reject and return them for a full refund. However, if
it must reject the machines and return them to Beta, Keystone will
suffer a delay costing the firm $60,000.
Construct a decision tree for this problem
Determine the maximum probability that Keystone could assign to
rejection of the Beta system before it would reject that firm’s
offer, assuming that it decides on the basis of minimizing expected
costs.
Assume that Keystone assigns a 50% probability of rejection to Beta
Controls. Would Keystone be willing to pay $15,000 for an assurance
bond that would pay $60,000 in the event that Beta Controls fails
the quality check? Explain your choice of answer .
Solutions
Expert Solution
KINDLY RATE POSITIVE WHICH WILL HELP US A LOT.
THANK YOU
Rahul Sunny answered 2 years agoRelated Solutions
Management accounting systems tend to parallel the manufacturing systems they support and control. Traditional manufacturing systems...
Management accounting systems tend to parallel the
manufacturing systems they support and control. Traditional
manufacturing systems emphasized productivity (average output per
hour or per employee) and cost. This was the result of a
competitive philosophy that was based on mass producing a few
standard products and "meeting or beating competitors on price." If
a firm is going to compete on price, it had better be a low-cost
producer.
Firms achieved low unit cost for fixed sets of resources by
maximizing...
Rogers Aeronautics, LTD, is a British aeronautics subcontract company that designs and manufactures electronic control systems...
Rogers Aeronautics, LTD, is a British aeronautics subcontract
company that designs and manufactures electronic control systems
for commercial airlines. The vast majority of all commercial
aircraft are manufactured by Boeing in the U.S. and Airbus in
Europe; however, there is a relatively small group of companies
that manufacture narrow-body commercial jets. Assume for this
exercise that Rogers does contract work for the two major
manufacturers plus three companies in the second tier.
Because competition is intense in the industry, Rogers...
Part 1 Aeronautics Company designs and manufactures electronic control systems for commercial airlines. Aeronautics Company does...
Part 1
Aeronautics Company designs
and manufactures electronic control systems for commercial
airlines.
Aeronautics Company does
contract work for the two major aircraft makers and three other
companies that make the narrow-body commercial jets.
This is a very competitive
field that Aeronautics Company operates in.
It is imperative they manage
the non-manufacturing overhead costs effectively in order to
achieve an acceptable net profit margin.
With declining profit margins
in recent years, the CEO has become concerned that the cost of...
Baker Manufacturing company has the recently implemented a new general and reporting systems. The systems allow...
Baker Manufacturing company has the recently implemented a new
general and reporting systems. The systems allow the various
accounting subsystems to enter and update the general ledger. All
department all allowed to enter adjusting entries and chart of
account changes. There are specific steps that must be followed in
order to enter transaction and adjusting entry information.
Specially, in the transaction entry input screen, the user is
required to input the first letter of their first name and their
last...
Keystone Manufacturing Company started operations on January 1, 2019. During 2019, the company engaged in the...
Keystone Manufacturing Company started operations on January 1,
2019. During 2019, the company engaged in the following
transactions: Issued common stock for $40,000. Paid $10,000 cash to
purchase raw materials used to make products. Transferred $9,000 of
raw materials to the production department. Paid $12,000 cash for
labor used to make products. Paid $18,000 cash for overhead costs
(assume actual and estimated overhead are the same). Finished work
on products that cost $35,000 to make. Sold products that cost
$31,500...
Keystone Manufacturing Company started operations on January 1, 2019. During 2019, the company engaged in the...
Keystone Manufacturing Company started operations on January 1,
2019. During 2019, the company engaged in the following
transactions:
Issued common stock for $40,000.
Paid $10,000 cash to purchase raw materials used to make
products.
Transferred $9,000 of raw materials to the production
department.
Paid $12,000 cash for labor used to make products.
Paid $18,000 cash for overhead costs (assume actual and
estimated overhead are the same).
Finished work on products that cost $35,000 to make.
Sold products that cost $31,500...
List and Explain important features of the New York Stock Exchange. What is meant by electronic trading systems, or electronic crossing systems.
List and Explain important features of the New York Stock Exchange. What is meant by electronic trading systems, or electronic crossing systems.
List the components of the framework commonly used in corporations when analyzing their internal control systems:...
List the components of the framework commonly used in
corporations when analyzing their internal control systems:
1.)
2.)
3.)
4.)
5.)
List the five common principles of Internal Control and give an
explanation and example of each
1.)
2.)
3.)
4.)
5.)
What are the two basic reasons that a company’s cash records do
not balance to the bank statement?
1.)
2.)
Sorur Inc. has gone out on bid for an electronic component. Expected demand is 500 units...
Sorur Inc. has gone out on bid for an electronic component.
Expected demand is 500 units per month. The item can be purchased
from either Asha Manufacturing or Brian Manufacturing. Their price
schedule is shown below. Ordering cost is $25, and annual holding
cost per unit is $15.
Ahsa
Mfg.
Brian Mfg.
Quantity
Price/unit
Quantity
Price/unit
1-
199
$20.00
1 – 299
$20.00
200 –
399
$19.80
300 –
599
$19.75
400+
$19.60
600+
$19.50
What is the optimal...
0. Ham & Ma, Inc. is submitting a bid to supply hammers for the Beijing Olympics...
0. Ham & Ma, Inc. is submitting a bid to supply hammers for
the Beijing Olympics Construction Company (BOCC). The BOCC will buy
3,000 hammers per year for the next 3 years. To supply the hammers,
Ham & Ma must buy $175,000 worth of manufacturing equipment.
The equipment has a 5-year life and will be depreciated for tax
purposes on a straight-line basis. The contract is for 3 years, and
Ham & Ma plans to sell the equipment at the...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Make-or-Buy Decision Fremont Computer Company has been purchasing carrying cases for its portable computers at a...
- The following costs were incurred for the single product produced during the first year of operations...
- Non-constant growth model: Do=$2.00 required return on equity= 5% g= 9% n=1,2 g=7% n=3,4 g=3% n=5...
- . Find all x ∈ Z143 such that x2Ξ 7 (mod 143). Please explain all steps...
- #Python: A palindrome is a sequence of characters that reads the same backwards as forwards. For...
- Explain an example in which a variable has two different addresses at different places in a...
- Hadley, a thirty-five-year-old physician, has worked at Princeton Plainsboro Hospital for six years. She recently received...
ADVERTISEMENT