Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 1 - Managerial Accounting: An Overview - Exercises - Page 22: Exercise 1-12

Answer

See explanation

Work Step by Step

1. My recommendation would be that both sections be reinforced since there are chances that any section could be hit. However, more reinforcement should be on the more vulnerable parts. Focusing on the most hit parts will be a form of optimism bias. Excessive optimism would mean that if the most vulnerable parts are reinforced, the less vulnerable parts will not be hit. This will be a biased/wrong conclusion, given that if the least vulnerable parts are hit, the damage will likely happen no matter how the most vulnerable parts are reinforced. 2. Cognitive bias could result in flawed decisions regarding the reinforcement of the planes. As discussed in (1) above, optimism bias can result in ignoring the less vulnerable parts. Besides, groupthink bias can result in ignoring some sections of the plane because most members hold that it is unnecessary to reinforce them.
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