Alieia Boat Company manufactures 10 luxury yachts per month. A navigation system is included in each yacht. Alieia Boat manufactures the navigation system in-house but is considering the possibility of outsourcing this function. At present, the variable cost per unit is $300, and the fixed costs are $38,000 per month. If it outsources the security system, fixed costs could be reduced by half, and the vacant facilities could be rented out to earn $3000 per month of rental income. What is the maximum contract cost that Alieia should pay for outsourcing?
A) any cost lower than $2500 per unit
B) any cost lower than $2200 per unit
C) any cost lower than $300 per unit
D) any cost lower than $3800 per unit
A) any cost lower than $2500 per unit
You might also like to view...
We are interested in determining what type of model best describes the relationship between two variables x and y.
a.For a given data set, an estimated regression equation relating x and y of the form
= b0 + b1x was developed using Excel. The results are shown below. Comment on the adequacy of this equation for predicting y. Let ? = .01.
?
SUMMARY OUTPUT
Regression Statistics
Multiple R0.5095
R Square0.2596
Adjusted R Square0.1362
Standard Error2.0745
Observations8
?
ANOVA ?
df
SS
MS
F
Significance F
Regression1
9.0536
9.0536
2.1037
0.1971
Residual6
25.8214
4.3036
Total7
34.875
?
Coefficients
Standard Error
t Stat
P-value
Intercept2.7857
1.6164
1.7234
0.1356
x0.4643
0.3201
1.4504
0.1971
?
b.An estimated regression equation for the same data set (as in part a) of the form
= b0 + b1x + b2x2 was developed. The Excel output is shown below. Comment on the adequacy of this equation for predicting y. Let ? = .01.
?
SUMMARY OUTPUT
Regression Statistics
Multiple R0.9680
R Square0.9370
Adjusted R Square0.9118
Standard Error0.6628
Observations8
ANOVA ?
df
SS
MS
F
Significance F
Regression2
32.6786
16.3392
37.1951
0.0010
Residual5
2.1964
0.4393
Total7
34.875
?
Coefficients
Standard Error
t Stat
P-value
Intercept-2.8393
0.9247
-3.0706
0.0278
x3.8393
0.4714
8.1437
0.0005
x-squared-0.375
0.0511
-7.3335
0.0007
?
c.Use the results of Part b and predict y when x = 4.
What will be an ideal response?
When consumers are unable to judge the quality of a product through examination or prior experience, they usually do which of the following and assume that the higher-priced product is the higher-quality product?
A) make a price-quality inference B) depend on an internal reference price C) assess the fair price D) experience an assimilation effect E) experience a price-placebo effect
Saraz, a leading brand of apparels, extends its presence to several parts of the United States
Upon research, the marketing managers identify that people belonging to music-based groups have subtle differences in their preferences when compared to the overall culture. The company adds variety to its product line to attract these diverse groups. In this case, the music-based group can be referred as a _____. a. subculture b. social class c. popular culture d. reference group
If Push Company owned 51 percent of the outstanding common stock of Shove Company, which method would be appropriate for financial reporting purposes?
A. Equity method B. Cost method C. Full consolidation method D. Fair value method