What are the answers and solutions of each?

QUANTITATIVE METHODS

1. Philip Enterprises, distributor of CDs is developing its budgeted cost of goods sold for next year. Philip has developed the following range of sales estimates and associated probabilities for that year:

Sales estimates Probability

P 60,000 0.25

P 85,000 0.40

P100,000 0.35

Philip's cost of goods sold averages 80% of sales. What is the expected value of Philip's budgeted cost of goods sold next year?

a. P85,000

b. P84,000

c. P68,000

d. P67,200

2. During the year, Brownout Company experienced the following power outages:

Number of Power Outages Per Month Number of Months

0 3

1 2

2 4

3 3

12

Each power outage results in out of pocket costs of P400. For P500 per month, the company can lease an auxiliary generator to provide power during outages. If the company leases an auxiliary generator next year, the estimated savings (or additional expenditures) would be

a.(P3,600)

c. P1,600

b.(P1,200)

d. P1,900

3. The Motion Company has decided to introduce a new product. The company estimates that there is a 30 percent probability that the product will contribute P700,000 to profits, a 30 percent probability that it will contribute P200,000, and a 40 percent probability that the contribution will be a negative P400,000. The expected contribution of the new product is

a. P500,000

c. P166,667

b. P110,000

d. P380,000