- 6 Marks
MA – Aug 2022 – L2 – Q5b – Decision making techniques
This question calculates the monthly expected profit of running a canteen service using demand and variable cost probabilities
Question
Aunty Dede Caterers runs a canteen service at a University and the following estimated information is available for the sale of lunch packs:
| Monthly Demand | Probability | Variable Cost per Pack (GH¢) | Probability |
|---|---|---|---|
| 2,000 packs | 0.3 | GH¢30 | 0.5 |
| 2,500 packs | 0.5 | GH¢15 | 0.4 |
| 3,000 packs | 0.2 | GH¢20 | 0.1 |
The probabilities of demand and the probabilities of variable cost are mutually exclusive. The selling price of a lunch pack is GH¢50, and the University charges a monthly fee of GH¢1,200 for the usage of the cafeteria.
Required:
Calculate the monthly expected profit of running the canteen.
Find Related Questions by Tags, levels, etc.
- Tags: Costing Techniques, Decision Making, Expected Profit, Probability Analysis
- Level: Level 2
- Topic: Decision making techniques
- Series: AUG 2022