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.
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MY TABLE IS AS FOLLOWS:
425 500 600
0 0 0
40000 29200 16800
90000 65700 3780425-90000
500-65700
600-16800
SO THE ANSWER IS 600
why is the answer 425 in the kitYou have prepared your regret table wrongly.
When prepared the regret table, we look at each of the uncertain items (in this case the variable cost) and compare the contributions we would get from each of the choices available to us (in this case the selling price).
So, for example, if the variable cost turns out to be $170, then the best course of action would be to have a selling price of $425 in which case there would be 0 regret. If on the other hand we had chosen a selling price of $500 then we would only get 240,900 as against 255,000 and so there is regret of the difference of 14,100. If we had chosen a selling price of $600 then we would only get 180,600 as against a possible 255,000 and so there is regret of the difference of 74,400.
Have you watched my free lectures on this?
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