# CMA Study Group

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## DETERMINISTIC APPROACH IN PROBABILTY ANALYSIS

• #### 1.  DETERMINISTIC APPROACH IN PROBABILTY ANALYSIS

Posted 06-10-2022 02:00 AM
Dear Friends,

Can you please explain the deterministic approach in probability analysis in this question?
Thank you in advance..
Regards

Gleason Co. has two products, a frozen dessert and ready-to-bake breakfast rolls, ready for introduction. However, plant capacity is limited, and only one product can be introduced at present. Therefore, Gleason has conducted a market study at a cost of \$26,000, to determine which product will be more profitable. The results of the study follow.
Sales of Desserts at \$1.80/unit
Sales of Rolls at \$1.20/unit
Volume
Probability
Volume
Probability
250,000
.30
200,000
.20
300,000
.40
250,000
.50
350,000
.20
300,000
.20
400,000
.10
350,000
.10
The costs associated with the two products have been estimated by Gleason's cost accounting department and are as follows:
Dessert
Rolls
Ingredients per unit
\$     .40
\$     .25
Direct labor per unit
.35
.30
Variable overhead per unit
.40
.20
Production tooling*
48,000
25,000