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Homework answers / question archive / A yatch company has developed a new cabin cruiser which they earmarked for the  medium to large board market

A yatch company has developed a new cabin cruiser which they earmarked for the  medium to large board market

Accounting

A yatch company has developed a new cabin cruiser which they earmarked for the 

medium to large board market. A market analysis has a 30% probability of annual sales 

being 5000 boats, and a 40% probability of 4000 annual sales. This company can go into 

limited production while available costs are sh.10,000 per boat and a fixed cost and 

sh.800,000 annually. Alternatively they can go into full production where variable cost 

are sh.9000 per boat and fixed costs are sh.5,000,000 annually, if the new boat is to be 

sold for shs.11,000 should the company go to limited or full scale production when the 

objective is to maximized expected profits (use a tree diagram)

 

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