Laplace criterion of rationality, Managerial Accounting

Laplace Criterion of Rationality

This criterion holds that if decision makers do not know the probabilities of the various states of nature and have no reason to think otherwise, then the states of nature should be considered to be equally likely. On the basis of this supposition, the predictable monetary value for each alternative is calculated and the alternative with the highest expected monetary value is chosen.

204_Untitled.jpg


Workings:

EMV Sh.4 = 1/3 (12000) + 1/3 (8000) + 1/3 (0) = 6667
Others are computed in the same way.

Decision:

Set a price of Sh.4.00 since it maximizes the expected monetary value.

 

Posted Date: 12/4/2012 7:08:43 AM | Location : United States







Related Discussions:- Laplace criterion of rationality, Assignment Help, Ask Question on Laplace criterion of rationality, Get Answer, Expert's Help, Laplace criterion of rationality Discussions

Write discussion on Laplace criterion of rationality
Your posts are moderated
Related Questions
Financial planning programs Such programs differ in complexity. Some simple programs can include only those variables discussed while other more complicated ones can include an


Managerial Accounting Before going to Managerial Accounting let us discuss a bit about Financial Accounting. Financial accounting is concerned with reporting to the external pa

Working capital is a necessary requirement for any type of business activity. Banks in India nowadays constitute the main suppliers of working capital credit to any type of busines

briefly discuss five characteristics of relevant cost

Debt equity ratio Meaning: this ratio establishes a relationship among long term debts and share holders funds. Objective: the objective of computing this ratio is to me

Interest coverage ratio (or debt service ratio)  Meaning: this ratio establishes a relationship among net profits before interest and taxes and interest on long debt. Obj

Open Account Credit sales are usually on open account that implies which the seller ships the goods to the buyer and afterward sends the bill invoice. Consignment In th

Steady state condition In many cases, the Markov process will converge to a steady state or equilibrium. In general, as number of transitions `n' increase, the state values

Exact management of receivables acquires a suitable collection policy that outlines the collection procedures. Collection policy consider as the procedure adopted through a firm to