Subject: PMDM (Decision Making in Accounting)

Using the data in the attached question, prepare; 1.Table of Regrets (opportunity costs) 2. using mini max regret method make the decision as to how many bags of cement the company needs to produce?

I1_:F5RK Sept 2016-.lune 201? as at 26April 2016 (002).pdf - Adobe Acrobat Reader DC File Edit View Window Help Home Tools F5 RK Sept 20164... X .bEEQ @@134r350 *weeizmvE-E? Cement Co. is a company specialising in the manufacturing of cement, a product used in the building industry. The company has found that when weather conditions are good, the demand for cement increases since more building work is able to take place. Last year, the weather was so good, and the demand for cement was so great, that Cement Co. was unable to meet demand. Cement is now trying to work out the level of cement production for the coming year in order to maximise prots. The company doesn't want to miss out on the opportunity to earn large prots by running out of cement again. However, it doesn't want to be left with large quantities ofthe product unsold at the end of the year, since it deteriorates quickly and then has to be disposed of. The company has received the following estimates about the probable weather conditions and corresponding demand levels for the coming year: Weather Probability Demand Good 25% 350,000 bags Average 45% 280,000 bags Poor 30% 200,000 bags Each bag of cement sells for $9 and costs $4 to make. If cement is unsold at the end ofthe year, it has to be disposed of at a cost of $0.50 per bag. Cement has decided to produce at one of the three levels of production to match forecast demand. It now has to decide which level of cement production to select. 6) Sigr (9