XY can choose from four mutually exclusive projects. The projects will each last for one year and their net cash inflows will be determined by market conditions. The forecast net cash inflows for each of the possible outcomes are shown below.

If the company applies the maximin criterion the project chosen would be:

• A. Project C
• B. Project D
• C. Project A
• D. Project B

A university is trying to decide whether or not to advertise a new post-graduate degree programme. The number of students starting the programme is dependent on economic conditions. If conditions are poor, it is expected that the programme will attract 40 students without advertising. There is a 60% chance that economic conditions will be poor. If economic conditions are good it is expected that the programme will attract only 20 students without advertising. There is a 40% chance that economic conditions will be good.
If the programme is advertised and economic conditions are poor, there is a 65% chance that the advertising will stimulate further demand and student numbers will increase to 50. If economic conditions are good, there is a 25% chance the advertising will stimulate further demand and numbers will increase to 25 students.
The profit expected, before deducting the cost of advertising, at different levels of student numbers are as follows:

The cost of advertising the programme will be $15,000.
Required:
Demonstrate, using a decision tree, whether the programme should be advertised.

• A. Yes, the programme should be advertised as the profit will be $92 000
• B. No, the programme should not be advertised as there will be a loss $82 000
• C. Yes, the programme should be advertised as the profit will be $82 000
• D. No, the programme should not be advertised as there will be a loss $92 000

JRL manufactures two products from different combinations of the same resources. Unit selling prices and unit cost details for each product are as follows:

The optimal solution in the previous question shows that the shadow prices of skilled labour and direct material A are as follows:
Skilled labour $ Nil
Direct material A $11.70
Explain the relevance of these values to the management of JRL.
What is the additional contribution that can be earned?

• A. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $5, 825
• B. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 570
• C. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $4, 825
• D. Thus the additional contribution that can be earned and therefore the penalty value at which WRX would decide not to supply the major customer order in full is $3, 825

JL is preparing its cash budget for the next three quarters. The following data have been extracted from the operational budgets:

Additional information is available as follows:
* JL sells 20% of its goods for cash. Of the remaining sales value, 70% is received within the same quarter as sale and 30% is received in the following quarter. It is estimated that trade receivables will be $125,000 at the beginning of Quarter 1. No bad debts are anticipated.
* 50% of payments for direct material purchases are made in the quarter of purchase, with the remaining 50% in the quarter following purchase. It is estimated that the amount owing for direct material purchases will be
$60,000 at the beginning of Quarter 1.
* JL pays labour and overhead costs when they are incurred. It has been estimated that labour and overhead costs in total will be $303,600 per quarter. This figure includes depreciation of $19,600.
* JL expects to repay a loan of $100,000 in Quarter 3.
* The cash balance at the beginning of Quarter 1 is estimated to be $49,400 positive.
Required:
Prepare a cash budget for each of the THREE quarters.
What will the closing balance of cash flows in quarter THREE be?

• A. $130 200
• B. $170 400
• C. $160 690
• D. $145 000
• E. $150 200
• F. $100 200
• G. $184 900

TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers' specific requirements. The standard cost per unit of its most popular cake is as follows:

The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and $20 per kg respectively. TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no inventory during the period.
What was the material price planning variance for ingredient B?

• A. The material price planning variance - Ingredient B was $64 000 F
• B. The material price planning variance - Ingredient B was $57 000 F
• C. The material price planning variance - Ingredient B was $54 000 F
• D. The material price planning variance - Ingredient B was $59 000 F