june 2011 no.1 (decision making under condition of uncertainty)

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August 20, 2012 at 12:35 pm #54196
samanthasteinier
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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 etc

HOW IS $1400 OBTAINED?????????
August 20, 2012 at 2:23 pm #104494
forhad
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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=$1,400,000

If DEMAND is AVERAGE(280,000), and SUPPLY is 280,000
Profit=280,000*$5=$1,400,000

If DEMAND is POOR(200,000), but SUPPLY is 280,000
Profit=(200,000*$5)-(80,000*$4.50)=$640,000

Hope, u r ok now.
August 21, 2012 at 4:22 am #104495
samanthasteinier
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ah ok thanks a lot.i was not understanding the 9 possibilities obtained.the question seems to be quite confusing.
August 21, 2012 at 7:32 am #104496
admin
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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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