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
STANDARD COSTING AND BUDGETARY CONTROL In practice, the terms standard cost and budgeted cost might be used interchangeably. Whereas it is possible to have budgeting without s

discuss the applicability of an operating cycle in vegetable growing in a low developed country like Uganda- Africa

Attributes of good information 1) Information is anything that is communicated and is sometimes said to be processed data. It is data processed in such a way as to be of meaning

Inappropriate standards (or targets): This is a problem arising from deficiencies in planning. If not enough time and resources are devoted to setting accurate standards in th

Find the value of the following: a.    If the total assets are Rs. 87,000 and the liabilities are Rs. 47,000, find out the amount of capital. b.    If the capital of propriet

Explain the Break-Even Analysis  The study of cost volume profit analysis is often referred to as break-even analysis and the two terms are used interchangeably by many. This i

Credit Limit A credit restriction is the maximum amount of credit that the firm will extend at a point of time. This indicates the extent of risk taken through the firm through

Have lot of questions please any one help me

accounting process or accounting cycle

A company manufactures a one product. Estimated cost data regarding this product and other information for the product and the company are as follows: Sales price per unit Rs.2000