During the year, Core, Rupt, and Baroque, Inc. had sales revenue of $13,200. For each of the following ranges of estimates provided, indicate which percent is the more conservative choice
a. Estimated sales returns range from 1 to 2% of total sales
b. Bad debts are expected to be between 1 and 2% of net sales
c. Estimated warranty costs are 1 to 2% of net sales
d. Straight-line depreciation rate could be 10% or 20% for its buildings
a. 2%,
b. 2%,
c. 2%,
d. 20%
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A manager is deciding whether or not to build a small facility. Demand is uncertain and can be either at a high or low level. If the manager chooses a small facility and demand is low, the payoff is $100
If the manager chooses a small facility and demand is high, the payoff is $300. On the other hand, if the manager chooses a large facility and demand is low, the payoff is -$200, but if demand is high, the payoff is $800. (a) What would be the best decision based on the Laplace criterion? (b) What would be the best decision based on Hurwicz's criterion of realism using ? = 0.6?
Average rate of return equals estimated average annual income divided by average investment
a. True b. False Indicate whether the statement is true or false