A company that has httherto prepared tis operating budgets on a single target level of performance is constdering changing to one of the following:

(i) a three-level budget;

(fi) a decisron tree analysis leading to a calculation of joint probabilities of budget levels:

(iii) a simulation of probabilities of budget levels (probably computer-based).

You are required to:

(a) explain briefly the method of constructing budgets for (i), (ii)

and (iii) above;

(b) comment briefly on the advantages that would result from choosing:

method (i) over the existing method;

method (ii) over method (i);

method (iii) over method (ii).