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Problem with probabilities.

Forums › ACCA Forums › ACCA PM Performance Management Forums › Problem with probabilities.

  • This topic has 0 replies, 1 voice, and was last updated 9 years ago by Radia.
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  • October 30, 2015 at 7:28 am #279652
    Radia
    Member
    • Topics: 5
    • Replies: 1
    • ☆

    SH is considering changing some of the vans it uses to transport crates to customers.The new vans come in 3 sizes, small ,medium, and large.SH is unsure about which type to buy.The capacity is 100 crates for the small van, 150 for the medium van and 200 for the large van.
    Demand for crates varies and can be either 120 or 190 crates per period,with the probability of the higher demand figure being 0.6.
    The sale price per crate is $10 and the variable cost is $4 for all van sizes subject to the fact that if the capacity of the van is greater than the demand for crates in a period then the variable cost will be lower by 10% to allow for the fact that the vans will be partly empty when transporting crates.
    SH estimates that in the case demand of crates exceeds capacity then a goodwill of $100 will be charged against profits per period to allow for future sales regardless of the number of customers that are turned away.Depreciation: small $200,medium $300,large van $400.
    Prepare a profits table showing the six possible profit figures per period.
    Need help with this..I am really confused.

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