A business that will open a gift shop in Los Angeles is considering making and selling love-themed magnets. It is thought that it will not be possible to order new magnets during the fair period, and magnets that are not sold during the fair period will not be sold later. A box of magnets costs the business $100 and generates $460 from its sale. The table includes predictions about demand probabilities. a-) What is the overstocking cost of the business in dollars/box?
A business that will open a gift shop in Los Angeles is considering making and selling love-themed magnets. It is thought that it will not be possible to order new magnets during the fair period, and magnets that are not sold during the fair period will not be sold later. A box of magnets costs the business $100 and generates $460 from its sale. The table includes predictions about demand probabilities. a-) What is the overstocking cost of the business in dollars/box?
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter11: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 11.18E
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A business that will open a gift shop in Los Angeles is considering making and selling love-themed magnets. It is thought that it will not be possible to order new magnets during the fair period, and magnets that are not sold during the fair period will not be sold later. A box of magnets costs the business $100 and generates $460 from its sale. The table includes predictions about demand probabilities.
a-) What is the overstocking cost of the business in dollars/box?
Transcribed Image Text:Demand(box)
10
11
12
13
14
15 and
and
more
less
Possibility
0.1
0.18
0.26
0.24
0.12
0.1
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