Question 1. Gobblecakes is a bakery that specializes in cupcakes. The annual fixed cost to make cupcakes is $18,000. The variable cost including ingredients and labor to make a cupcake is $0.90. The bakery sells cupcakes for $3.20 apiece.
a. If the bakery sells 12,000 cupcakes annually, determine the total cost, total revenue, and profit.
b. How many cupcakes will the bakery need to sell in order to break even?
Question 2. Evergreen Fertilizer Company produces fertilizer. The company's fixed monthly cost is $25,000, and its variable cost per pound of fertilizer is $0.15. Evergreen sells the fertilizer for $0.40 per pound. Determine the monthly break-even volume for the company.
Question 3. A large research hospital has accumulated statistical data on its patients for an extended period. Researchers have determined that patients who are smokers have an 18% chance of contracting a serious illness such as heart disease, cancer, or emphysema, whereas there is only a .06 probability that a nonsmoker will contract a serious illness. From hospital records, the researchers know that 23% of all hospital patients are smokers, while 77% are nonsmokers. For planning purposes, the hospital physician staff would like to know the probability that a given patient is a smoker if the patient has a serious illness.
Question 4. The Senate consists of 100 senators, of whom 34 are Republicans and 66 are Democrats. A bill to increase defense appropriations is before the Senate. Thirty-five percent of the Democrats and 70% of the Republicans favor the bill. The bill needs a simple majority to pass. Using a probability tree, determine the probability that the bill will pass.
Question 5. A metropolitan school system consists of three districts-north, south, and central. The north district contains 25% of all students, the south district contains 40%, and the central district contains 35%. A minimum-competency test was given to all students; 10% of the north district students failed, 15% of the south district students failed, and 5% of the central district students failed.
a. Develop a probability tree showing all marginal, conditional, and joint probabilities.
b. Develop a joint probability table.
c. What is the probability that a student selected at random failed the test?