Dec '11 Past Paper

I think it would be hard for me to improve on the explanation given in the ACCA model answer. Give me one number you need to have explained.

Oh my you are right. CPU demand 500, Package 1.....62, 972 AND Profit under demand 500, Package 1.....4, 557, 302

CPU, Package 1, 500 demanded: 62,972 =

11,412 + 9,500 + 8,450 + 4,810 +13,800 +7,500,000/500, ie full cost.

Variable cost per unit = 11,412 + 9,500 + 8,450 + 4,810 +13,800 = 47972

19% mark-up = 0.19 x 47972 = 9,114.68, profit per unit
9114.68 x 500 units = 4,557,340 (rounding difference compared to ACCA answer).

HTH

Hi,
May i know if i used the expected value in my maximax, maximin and minimax regret will gain mark for the calculation?

Thanks!

Expected value plays no part in maximax etc, so you wouldn't get many, or any, marks.

Dear Tutor, can you please also explain how the Profit under demand 500, Package 2 ...... 3 307 302 was calculated?

Please somebody help me with my question

CPU, Package 2, 500 demanded: 65,472 = 11,412 + 9,500 + 8,450 + 4,810 +13,800 +8,750,000/500, ie full cost. Variable cost per unit = 11,412 + 9,500 + 8,450 + 4,810 +13,800 = 47972 19% mark-up = 0.19 x 47972 = 9,114.68, profit per unit 9114.68 x 500 units = 4,557,340 = package 1 profit, before 7,500,000 fixed costs (rounding difference compared to ACCA answer). Package 2 has same variable costs and markup, but its fixed costs are 1,250,000 higher and so its profit is q,250,000 lower than package 1; similarly, package 3 is 2,500,000 lower profits than Package 1 because fixed costs are $2,500,000 higher.

Got you, thanks a lot!!