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Which of the following options is closer to the profit that she should expect to obtain if her fixed cost is £250, and for the unit costs she knows that WV-chi-square (2) and BV-chi-square(3) where WV denotes the unit cost of wedding cake decorations and BV the unit cost of birthday cake decorations? Assume that all variables are independent from one another.A. 50; B. 100:C. 150:D. 200;E. 250.To calculate the expected profit, Dolores needs to consider the difference between revenue and costs for each type of decoration.Revenue for wedding cake decorations:𝑅𝑊𝑃=𝑊𝑂×𝑊𝑃R WP =WO×WPRevenue for birthday cake decorations:𝑅𝐵𝑃=𝐵𝑂×𝐵𝑃R BP =BO×BPTotal revenue:𝑅=𝑅𝑊𝑃+𝑅𝐵𝑃R=R WP +R BP Total costs:𝐶=250+𝑊𝑉×𝑊𝑂+𝐵𝑉×𝐵𝑂C=250+WV×WO+BV×BOProfit:𝑃=𝑅−𝐶P=R−CTo calculate each term, we need to compute the expected values for the distributions given:Wedding cake decoration price: 𝐸[𝑊𝑃]=6E[WP]=6Birthday cake decoration price: 𝐸[𝐵𝑃]=3+𝐸[𝑆𝑡𝑢𝑑𝑒𝑛𝑡−𝑡(3)]E[BP]=3+E[Student−t(3)] (Expected value of Student-t(3) distribution is 0)Wedding cake decoration orders: 𝐸[𝑊𝑂]=75E[WO]=75Birthday cake decoration orders: 𝐸[𝐵𝑂]=80E[BO]=80Wedding cake decoration unit cost: 𝐸[𝑊𝑉]=2E[WV]=2Birthday cake decoration unit cost: 𝐸[𝐵𝑉]=3E[BV]=3Substitute these values into the revenue and cost formulas, then find the difference to get the profit.

Question

Which of the following options is closer to the profit that she should expect to obtain if her fixed cost is £250, and for the unit costs she knows that WV-chi-square (2) and BV-chi-square(3) where WV denotes the unit cost of wedding cake decorations and BV the unit cost of birthday cake decorations? Assume that all variables are independent from one another.A. 50; B. 100:C. 150:D. 200;E. 250.To calculate the expected profit, Dolores needs to consider the difference between revenue and costs for each type of decoration.Revenue for wedding cake decorations:𝑅𝑊𝑃=𝑊𝑂×𝑊𝑃R WP =WO×WPRevenue for birthday cake decorations:𝑅𝐵𝑃=𝐵𝑂×𝐵𝑃R BP =BO×BPTotal revenue:𝑅=𝑅𝑊𝑃+𝑅𝐵𝑃R=R WP +R BP Total costs:𝐶=250+𝑊𝑉×𝑊𝑂+𝐵𝑉×𝐵𝑂C=250+WV×WO+BV×BOProfit:𝑃=𝑅−𝐶P=R−CTo calculate each term, we need to compute the expected values for the distributions given:Wedding cake decoration price: 𝐸[𝑊𝑃]=6E[WP]=6Birthday cake decoration price: 𝐸[𝐵𝑃]=3+𝐸[𝑆𝑡𝑢𝑑𝑒𝑛𝑡−𝑡(3)]E[BP]=3+E[Student−t(3)] (Expected value of Student-t(3) distribution is 0)Wedding cake decoration orders: 𝐸[𝑊𝑂]=75E[WO]=75Birthday cake decoration orders: 𝐸[𝐵𝑂]=80E[BO]=80Wedding cake decoration unit cost: 𝐸[𝑊𝑉]=2E[WV]=2Birthday cake decoration unit cost: 𝐸[𝐵𝑉]=3E[BV]=3Substitute these values into the revenue and cost formulas, then find the difference to get the profit.

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