Question 36

3 / 3 pts
 
Mr. Imbestigador is contemplating whether to investigate the efficiency variance in its
variable manufacturing costs. The investigation will cost P10, 000. If the production
departments are formed to be operating improperly, the company will incur P25, 000 (in
addition to the cost of investigation) to correct the operations.
 
If the production departments are operating improperly and Mr. Imbestigador fails to
investigate, operating costs from various inefficiencies are expected to amount to P40,
000.
 
1. What is the expected value of the act “Investigate” if the probability of improper
C

operations is 60%? 
A. P15,000 
B. P10,000
C. P25,000
D. P  5,000
 
2. What is the expected value of the act “Do not investigate” if the probability of
B

improper operations is 60% 

A. P40,000
B. P24,000
C. P34,000
D. P30,000
 
3. Mr. Imbestigador would be indifferent between the two actions “investigate” and “Do
D

not investigate” if the probability of improper operations is 

A. 60%.
B. 40%.
C. 33 1/3%.
D. 66 2/3%.
Answer 1:
Correct!C
Correct Answer
C.
 
Answer 2:
Correct!B
Correct Answer
B.
 
Answer 3:
Correct!D
Correct Answer
D.
 
 
Question 37
1 / 1 pts
Trixie Company needs a component part for the production of a new product. The
component part is available from local suppliers, but the company can make it with the
use of a special equipment which it can rent for P10, 000 per month.
 
Each new product requires one component part. Thus, production requirement for the
part is the same as the demand for the new product, which could be high (5,000 units
per month), with probability of 70%, or low (2,000 units per month).
 
The contribution margin per unit of the new product is P12 if the company will make the
part, and P8 if the part is purchased from local suppliers.
 
The company’s management accountant prepared the following decision tree to help
management select the better alternative:
Which of the following statements is correct?
 
Correct!
  
Making the part is the better alternative.
 

  
The expected value of making the component part is P39,200.
 

  
Buying the part is the better alternative.
 

  
The expected value of buying the component part is P32,800.
 
 
Question 38
1 / 1 pts
In the Gantt chart below, each of the bars represents the expected time necessary to
complete the activity and the shaded regions represent the portions completed:

 Based on the Gantt chart,

  
the project is on schedule.
 
Correct!
  
Activity C is one month behind schedule.
 

  
activities A and B are still in progress.
 

  
the project is ahead of schedule.
 
 
Question 39
2 / 2 pts
In a PERT network, the optimistic time (to) for a particular activity is 3 weeks, the most
likely time I is 5 weeks, and the pessimistic time (tp) is 7 weeks.
 
A

1. The expected time (te)to complete the activity is 

A. 5 weeks . 
B. 2.5 weeks.
C. 17 weeks.
D. 30 weeks.
 
B

2. The best estimate of the standard deviation for the activity is 
A. 4 weeks.
B. 2/3 week.
C. 5 weeks
D. 1 2/3 weeks.
Answer 1:
Correct!A
Answer 2:
Correct!B
 
Question 40
1 / 1 pts
In a PERT network, slack is the

  
path that requires the longest completion time.
 
Correct!
  
time (number of days, weeks, etc.) an activity can be delayed without forcing a delay for
the entire project.
 

  
most likely time estimate for an activity.
 

  
average of the time estimates for an activity.