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1 Cement Co(answer)
(a) Pay off table
no ogf bags
$350000 $280000 $200000
WEATHER
good ($000) $1750 1400
average $1085 1400
poor $325 640(1) 350,000 x $5 = $1,750,000
(2) [280,000 x $5] – [70,000 x $(4·50)] = $1,085,000 etcHOW IS $1400 OBTAINED?????????
Profit=$9-$4=$5 per bag.
In case of disposal,
Loss=$4+$0.50=$4.50 per bag.If DEMAND is GOOD(350,000), but SUPPLY is 280,000
Profit=280,000*$5=$1,400,000If DEMAND is AVERAGE(280,000), and SUPPLY is 280,000
Profit=280,000*$5=$1,400,000If DEMAND is POOR(200,000), but SUPPLY is 280,000
Profit=(200,000*$5)-(80,000*$4.50)=$640,000Hope, u r ok now.
ah ok thanks a lot.i was not understanding the 9 possibilities obtained.the question seems to be quite confusing.
You can watch lecture which solve the whole question:
https://opentuition.com/acca/f5/acca-f5-past-exam-question-1-june-2011-decision-making/
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