ABC Co is a small mail order company, which sells direct to established customer on itsmailling list (using catalogúe and leaflets). And to a new customers via newspaper adversting.The range of its prooducts covers men's and women's leisurewear, games, toys. Over the lastfew years the company has built up a mailing lists of several thousand, to whom leissurewearcatalogúe and leaflets are sent from time to time. An opportunity has risen to buy from amarket research company either one or two customer lists, each on costing$20,000. The directors estimate that, if the two list were bought, sales could be average orlow, again with equal chancesIf neither list were bought, it is estimated that sales could be average or low, with the odds4:1 in favour low sales. Whenever sales turn out to be low, the directors have a contingencyplan, in which they could decide whether or not to place advertisement in newspaper, at acost $9,000, offering "special purchase"The chances of high, average or low sales of "special purchase" are estimated to be 50%,25%, and 25% respectively. The contributions from the various sales levels (S'000) areshown belowSales levelsHighAverageLowNormal business200160110Special purchase4016-20Requirements:Draw a decision tree for the "mailing list" problem, including all probabilities and pay offs

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Answered: Requirements: Draw a decision tree for…

Business

Accounting

Requirements: Draw a decision tree for the "mailing list" problem, including all probabilities and pay offs

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 21RQSC

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Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales. Refer to Appendix 2 to answer this question. Determine the number of salespeople Wheels needs if it has 1,000 bicycle shop accounts that need to be called on four times per year. Each sales call lasts…
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