Hello Shivaniya,
Hope you are doing great with CMA
This is a probability case which can be demonstrated as deon and Hebah have mentioned bellow.
To explain the answer: Expected profit = (Estimated sales x probabilities) - Estimated cost
Taking in consideration that: If sales made
before and at the game day >>> Probability = 35% with $25 selling price Any sales made
after the game day >>> Probability = 65% with $10 selling price = (6,000 x 35% x $25) + (6,000 x $65% x $10) - (6,000 x $13.00)
= $52,500 + $39,000 - $78,000
= $13,500
Thanks to Deon & Hebah
Kind regards
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Samer Ahmad, FMVA, SCA
Kuwait
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Original Message:
Sent: 01-31-2020 03:31 AM
From: Shivaniya Singh
Subject: query regarding Cma -part-1 section B4
Hello
Kindly help me with the query.
Carson Products sells sweatshirts and is preparing for a World Cup soccer match. The cost per sweatshirt varies with the quantity purchased as follows:
Carson must purchase the shirts one month before the game and has analyzed the market and estimated sales levels as follows.
The estimated selling price is $25 for sales made before and at the game day. Any shirts remaining after game day can be sold at wholesale to a local discount store for $10.
The expected profit if Carson purchased 6,000 shirts is:
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