In the standard P-A model, P sets the parameters of the contract: the base pay k and the piece rate m. Suppose A would set the parameters. What statement is correct? a. Piece rate would be lower (to avoid spending too much effort) and base pay higher b. Piece rate would be the same and base pay higher (to extract a higher surplus) c. Both parameters would be the same d. Piece rate would be higher (to get a better pay per unit of effort) and base pay the same

In the standard P-A model, P sets the parameters of the contract: the base pay k and the piece rate m. Suppose A would set the parameters. What statement is correct? a. Piece rate would be lower (to avoid spending too much effort) and base pay higher b. Piece rate would be the same and base pay higher (to extract a higher surplus) c. Both parameters would be the same d. Piece rate would be higher (to get a better pay per unit of effort) and base pay the same

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 32P

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In the standard P-A model, P sets the parameters of the contract: the base pay k and the piece rate m. Suppose A would set the parameters. What statement is correct? Piece rate would be lower (to avoid spending too much effort) and base pay higher Piece rate would be the same and base pay higher (to extract a higher surplus) Both parameters would be the same Piece rate would be higher (to get a better pay per unit of effort) and base pay the same
Suppose that a firm has the option to make or buy a part. Its annual requirement is 11,000 units. A supplier is able to supply the part at $6 per unit. The firm estimates that it costs $800 to prepare the contract with the supplier. To make the part, the firm must invest $29,000 in equipment, and the firm estimates that it costs $3 per unit to make the part. COSTS MAKE OPTION BUY OPTION Fixed Cost $29,000 $800 Variable Cost $3 $6 Annual Requirement = 11,000 units 1. What is the break-even point? Round your answer to the nearest whole number. 2. What is the total cost at the break-even point? Round your answer to the nearest dollar. 3. What is the total cost for the make option? Round your answer to the nearest dollar.
(b) MNM Century Sdn Bhd is a building contractor in Johor who just won the tender to construct 20 units of low-mid-cost house in Pontian, Johor. Both client and contractor agreed that the term for payment is based on the unit completed. For each unit completed, the contractor will be paid one-off payment worth RM 100,000. The contractor have to choose whether to use the traditional method or innovative IBS system in order to maximize their profit. The details for both construction methods are shown in Table 1. Table 1 Innovative IBS Description Traditional Method System Total construction duration 24 months 12 months Working days/week 6 days 5 days Cost Factors Fixed cost RM 200,000 RM250,000 Site staff salary (total, monthly) RM20,000 RM25,000 Labour cost (Average, daily) RM80 x 5 рах RM120 x 5 pax M&E labour cost (per unit) RM2,000 RM2,000 Material cost per unit RM 30,000 RM 20,000 (i) Demonstrate the best method between the two options from economic perspective? (ii) Based on your…
Which is the correct answer for the question below. Some popular reality television programs follow people who buy the contents of abandoned storage lockers at public auctions. In most cases, several storage lockers are sold in sequence during a particular auction. Occasionally, one of the buyers will purposefully bid much more than the expected value of a particular storage locker in order to intimidate the other bidders. What is a plausible explanation for these excessive bids? A. The excessive bids may be rational if they occur during the last auction of the day. B. The bidder is trying to establish a first-mover advantage, but only if they occur during the first auction of the day. C. The buyer is trying to establish a reputation that may affect the outcome of later auctions. D. The excessive bids represent a form of tacit collusion among the buyers.
7. Three bidders have a private valuation drawn from a uniform distribution on [0,30] for a single item. The valuations are 10, 15 and 20 for bidders 1, 2 and 3 respectively. a) What are the bidders' equilibrium strategies in a second price auction? b) Show that for bidder 2 no deviation from his strategy in a) would be profitable. c) Who wins the auction and how much do they pay? d) If instead the seller uses a first price sealed bid auction, what are the bidders' equilibrium strategies?
ABC Corporation has recently given out a nine-month contract to a construction subcontractor. At the end of the first month, it becomes obvious that the subcontractor is not reporting costs according to an appropriate WBS level. ABC Corporation asks the subcontractor to change its cost reporting procedures. The subcontractor states that this cannot be done without additional funding. This problem has occurred with other subcontractors as well. What can ABC Corporation do about this?
4. A bridge that was constructed at a cost of P75,000,000 is expected to last 30 years, at the end of which time its renewal cost will be P40,000,000. Annual repairs and maintenance are P3,000,000. What is the capitalized cost of the bridge at an interest of 6%?
You want to lease a set of golf clubs from Pings Ltd.The lease contract is in the form of 24 equal monthly payments at a 10.4 percentstated annual interest rate, compounded monthly. Because the clubs cost $2,300retail, Pings wants the PV of the lease payments to equal $2,300. Suppose that yourfirst payment is due immediately. What will your monthly lease payments be?
Mary hopes to sell 10,000 pieces of chrysanthemum last November but she was able to sell 15,000 chrysanthemum. Her chrysanthemum is sold at 20 pesos each. Her total expenses was 150,000, hence, cost per unit is 15.00. What was her sales volume variance? *25,00075,00015,000100,000 Mary hopes to sell 10,000 pieces of chrysanthemum last November but she was able to sell 15,000 chrysanthemum. Her chrysanthemum is sold at 20 pesos each. Her total expenses was 150,000, hence, cost per unit is 15.00. What was her sales volume variance? *25,00075,00015,000100,000
Following a tendering process your firm has recently been appointed external auditor of Dazzle Ltd (Dazzle) for the year ending 31 July 20X1. The audit engagement letter is still to be signed. The previous auditor did not seek reappointment. Your firm has also been invited to provide tax planning and compliance work for the company. All of the shares of Dazzle are owned by two sisters: Ruby and Amber Dazzle. They are the only directors and spend on average three days a week managing Dazzle as they have other business interests. The company employs a full-time qualified accountant but does not have a Finance Director. Dazzle manufactures and sells high quality mirrors and light fittings, which are produced in the company’s workshop, in the North East of England. At peak times the company uses subcontractors to help with the manufacture of light fittings as they lack sufficient staff in this area. Due to changes in working practices as a result of covid-19 fewer people are permitted in…
Mr Price, has no debt outstanding and a total market value of R150,000. Earnings before interest and taxes [EBIT] are projected to be R14,000 if economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 30% higher. If there is a recession, then EBIT will be 60% lower. Mr Price is considering a R60,000 debt issue with a 5% interest rate. The proceeds will be used to repurchase shares of stock. There are currently 2,500 shares outstanding. Ignore taxes for this problem. Assuming that Mr Price goes through with recapitalization. Calculate the % changes in EPS when the economy enters a recession
The cash flow details of a public project is as follows Initial cost =BD 210000 Annual operating cost = BD 10000 Worth of annual benefits = BD 12,000 Worth of annual disbenefits = BD 1245 Salvage value = BD 150000 Interest rate per year = 8% and useful lie = 30 Years Using benefit-cost ratio method and find out the economical acceptability of the public project. Use PW and AW methods to find out the equivalent worth of costs, benefits and disbenefits, also discuss why it is profitable(Use excel)