Your company has developed a new energy drink and you are trying to decide whether to sell the recipe, or make and distribute it yourself. A company will pay you $9 million for the recipe. If your company makes the drink itself, it will cost $12 million to build a factory and distribution network. Your analytics and marketing teams tell you there is a 30% chance the market response will be great, a 60% chance the market response will be decent with gross earnings of $15 million, and a 10% chance the market response will be poor with gross earnings of $5 million. If the market response is great, there is a 30% chance the drink will be the new fad and you will make gross earnings of $50 million, a 60% chance the gross earnings will be $40 million, and a 10% chance the gross earnings will be $20 million. What is the expected value from the Perfect Information Tree (just the perfect information tree, not EVPI).

Milden company has an exclusive franchise to purchase a product from the manufacturer and distribute it on the retail level. as an aid in planning, the company has decided to start using a contribution format income statement. to have data to prepare such a statement, the company has analyzed its expenses and has developed the following cost formulas: cost cost formula cost of good sold $35 per unit sold advertising expense $210,000 per quarter sales commissions 6% of sales shipping expense ? administrative salaries $145,000 per quarter insurance expense $9,000 per quarter depreciation expense $76,000 per quarter management has concluded that shipping expense is a mixed cost, containing both variable and fixed cost elements. units sold and the related shipping expense over the last eight quarters follow: quarter units sold shipping expense year 1: first 10,000 $ 119,000 second 16,000 $ 175,000 third 18,000 $ 190,000 fourth 15,000 $ 164,000 year 2: first 11,000 $ 130,000 second 17,000 $ 185,000 third 20,000 $ 210,000 fourth 13,000 $ 147,000 milden company’s president would like a cost formula derived for shipping expense so that a budgeted contribution format income statement can be prepared for the next quarter. required: 1. using the high-low method, estimate a cost formula for shipping expe