The Southern Bell Company manufactures 2,000 telephones per year. The full manufacturing costs per telephone are as follows: Direct materials $2
Direct labor $8
Variable manufacturing overhead $6
Average fixed manufacturing overhead $6
The Illinois Bell Company has offered to sell Southern Bell Company 2,000 telephones for $15 per unit. If Southern Bell Company accepts the offer, $10,000 of fixed overhead will be eliminated. Southern Bell should:.
A. Make the telephones; the savings is $2,000.
B. Buy the telephones; the savings is $24,000.
C. Make the telephones; the savings is $12,000.
D. Buy the telephones; the savings is $12,000.

Aeuropean aircraft producer has spent 15 years in developing a new aircraft that would potential threaten long-lasting boeing's dominance (monopoly) in the same class of aircrafts. the new european aircraft gets high marks on all performance measures except noise. because of the noise, the european producers management is concerned that the us government may impose restrictions which would forbid their aircraft to land in some of the american airports. without restrictions the estimated (present discounted) profit would be 125 million usd. with the restrictions the profit would only be 25 million usd. the chances of both outcomes are estimated to be 50-50. management must decide now whether to the cost of redesign program problem and a 60% chance it will fail. should the european aircraft producer start the noise redesign program if they do not have any redesign parts of the aircraft to solve the noise problem. is 25 million usd. there is a 40% chance that redesign will solve the noise additional information than mentioned above? draw the decision tree, indicate probabilities and outcomes of the events * imagine that the company could find out in advance the outcome of the u.s. government's e find the expected value of perfect information about the u.s. government's decision. decision. draw a new decision tree, indicate probabilities and outcomes of the events.