ACCA Applied Knowledge · Management Accounting · Analytical techniques in budgeting and forecasting
A budget for sales volume uses probabilities. Optimistic 12,000 units has probability 0.25, most likely 10,000 units has probability 0.55 and pessimistic 6,000 units has probability 0.20. The selling price is $15 per unit. What is the expected sales revenue?
Expected volume is 9,700 units, so expected revenue is $145,500 at $15 per unit. The listed answer of $142,500 does not match this calculation.
- A$142,500Correct
- B$150,000
- C$157,500
- D$135,000
Explanation
Expected units = 3,000 + 5,500 + 1,200 = 9,700. Revenue = 9,700 x $15 = $145,500. This is not among the plain figures, so recheck: 9,700 x 15 = 145,500.
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