Advanced: Calculation of expected value and the presentation of a probability distribution The Dunburgh Bus Company operated during the year ended 31 May 2000 with the following results:

(i) Average variable costs were £0-75 per bus mile.

(ii) Total fixed costs were £1 750 000.

(iii) The fare structure per journey was as follows:

calculated in (i) for the year ended 31 May 2001 in a way which brings to the attention of management the risks and opportunities which are implied and comment briefly on the figures.
(5 marks)
(d)Comment on factors which have not been incorporated into the model used in

(c) above which may affect its usefulness to management in profit forecasting.

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Adults 0 to 3 miles 0.20 4 to 5 miles 0.30 over 5 miles 0.50 0.15 0.10 Juveniles (any distance) Senior citizens (any distance) (iv) Total passenger journeys paid for were 24 000 000 which represented 60% capacity utilization. The capacity utilized comprised 60% adult, 20% juvenile and 20% senior citizen journeys. The adult journeys were broken down into 0-3 miles: 50%, 4-5 miles: 30%, over 5 miles: 20%.