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Mvomero Company must choose between one of two machines. Machine A has low fixed costs and high unit variable costs whereas machine B has high

Mvomero Company must choose between one of two machines. Machine A has low fixed costs and high unit variable costs whereas machine B has high fixed costs and low unit variable cost. Consequently, machine A is most suited to low level demand whereas machine B is suited to a high-level demand. The estimated profitability for each demand level is as follows:

State of nature Alternative
Machine A Machine B
Low demand 100,000 10,000
High demand 160,000 200,000

Required: Use the possible decision rules to advice the management of Mvomero Company.

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