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The Cruiser Skateboard Company is contemplating 3 new lines of new skateboard models. The Cost...

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Accounting

The Cruiser Skateboard Company is contemplating 3 new lines of new skateboard models. The Cost
schedule for the 3 designs is:
Skateboard Fixed Cost () Variable Cost per Pair ()
A 50,00075
B 75,00060
C 90,00030
Three probable levels of sales are estimated to be (a)2,000 units, (b)4,000 units and 6,000 units with
probabilities of 0.3,0.45 and 0.25 respectively. The selling price is 400 per unit.
(a) On the basis of expected present value, which design should be chosen?

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