Question 1

Which of the following is NOT a feature of a probability distribution?

Accepted Answer

A)  a value of 0 for an event denotes a nil likelihood of occurrence 
B)  a value of 1 for an event signifies absolute certainty 
C)  the total of the probabilities for all possible events listed in the distribution can vary 
D)  a probability distribution attempts to provide a list of all possible outcomes 
A)  a value of 0 for an event denotes a nil likelihood of occurrence 
B)  a value of 1 for an event signifies absolute certainty 
C)  the total of the probabilities for all possible events listed in the distribution can vary 
D)  a probability distribution attempts to provide a list of all possible outcomes

Question 2

Which of the following assumptions apply when making decisions on the basis of expected values:

Accepted Answer

A)  the decision must be a 'one-off'. 
B)  there must be many possible outcomes. 
C)  it is based on the assumption that the decision will be repeated many times. 
D)  none of the above. 
A)  the decision must be a 'one-off'. 
B)  there must be many possible outcomes. 
C)  it is based on the assumption that the decision will be repeated many times. 
D)  none of the above.

Question 3

The following represent a tutor's estimate of the probability of students A, B, C and D failing an examination. Which student does the tutor consider has the best chance of passing the examination?

Accepted Answer

A)  student A = 0 
B)  student B = 0.5 
C)  student C = 0.6 
D)  student D = 0.2 
A)  student A = 0 
B)  student B = 0.5 
C)  student C = 0.6 
D)  student D = 0.2

Question 4

The expected value represents:

Accepted Answer

A)  the weighted average of the possible outcomes. 
B)  the most likely outcome. 
C)  the outcome with the highest probability. 
D)  none of the above. 
A)  the weighted average of the possible outcomes. 
B)  the most likely outcome. 
C)  the outcome with the highest probability. 
D)  none of the above.

Question 5

Which of the following represent states of nature?

Accepted Answer

A)  a potential set of outcomes expressed in monetary terms 
B)  the most likely result that is going to occur 
C)  a list of potential courses of action that can be undertaken 
D)  a list of different conditions that might be experienced relating to the economy such as recession, boom etc. 
A)  a potential set of outcomes expressed in monetary terms 
B)  the most likely result that is going to occur 
C)  a list of potential courses of action that can be undertaken 
D)  a list of different conditions that might be experienced relating to the economy such as recession, boom etc.

Question 6

Figure 12-3
The Lee Company must choose between two mutually exclusive alternatives. With alternative 1 an inferior product will be marketed that is best suited to low levels of demand whereas alternative 2 is a superior product that is best suited to high levels of demand. There are only two possible levels of demand - high and low and the probabilities of each event occurring is 0.5. The predicted profits for each alterative are:  
-Refer to Figure 12-3. Using the data above relating to the Lee Company, which alternative should be selected using the maximin criterion?

Accepted Answer

A)  Neither alternative 
B)  Alternative 1 
C)  Alternative 2 
D)  It is not possible to use the maximin criterion for the data given. 
A)  Neither alternative 
B)  Alternative 1 
C)  Alternative 2 
D)  It is not possible to use the maximin criterion for the data given.

Question 7

Which of the following best describes objective probabilities?

Accepted Answer

A)  repeating an experiment that exactly simulates the decision and using the data to derive the probability 
B)  obtaining an estimate from an expert 
C)  using a firm of management consultants to provide the value of the probability 
D)  none of the above 
A)  repeating an experiment that exactly simulates the decision and using the data to derive the probability 
B)  obtaining an estimate from an expert 
C)  using a firm of management consultants to provide the value of the probability 
D)  none of the above

Question 8

Figure 12-3
The Lee Company must choose between two mutually exclusive alternatives. With alternative 1 an inferior product will be marketed that is best suited to low levels of demand whereas alternative 2 is a superior product that is best suited to high levels of demand. There are only two possible levels of demand - high and low and the probabilities of each event occurring is 0.5. The predicted profits for each alterative are:  
-Refer to Figure 12-3. Using the data above relating to the Lee Company, which alternative should be selected using the regret criterion?

Accepted Answer

A)  Neither alternative 
B)  Alternative 1 
C)  Alternative 2 
D)  It is not possible to use the regret criterion for the data given. 
A)  Neither alternative 
B)  Alternative 1 
C)  Alternative 2 
D)  It is not possible to use the regret criterion for the data given.

Question 9

Figure 12-1
Joe Bloggs is considering the following three alternatives that are estimated to yield the following potential monetary benefits:   It is estimated that all of the outcomes are equally likely.
-Refer to Figure 12-1. Assuming that Joe is a risk averter which alternative is he likely to prefer?

Accepted Answer

A)  Alternative A 
B)  Alternative B 
C)  Alternative C 
D)  He will be indifferent as to which alternative to choose. 
A)  Alternative A 
B)  Alternative B 
C)  Alternative C 
D)  He will be indifferent as to which alternative to choose.

Which of the following is NOT a feature of a probability distribution?

Which of the following assumptions apply when making decisions on the basis of expected values:

The following represent a tutor's estimate of the probability of students A, B, C and D failing an examination. Which student does the tutor consider has the best chance of passing the examination?

The expected value represents:

Which of the following represent states of nature?

Which of the following best describes objective probabilities?

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost Assignment

Accounting Entries for a Job Costing System

Process Costing

Joint and By-Product Costing

Income Effects of Alternative Cost Accumulation Systems

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Activity-Based Costing

Pricing Decisions and Profitability Analysis

Capital Investment Decisions: Appraisal Methods

Capital Investment Decisions: the Impact of Capital Rationing, Taxation, Inflation and Risk

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis 1

Standard Costing and Variance Analysis 2: Further Aspects

Divisional Financial Performance Measures

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Management Accounting

Cost Estimation and Cost Behaviour

Quantitative Models for the Planning and Control of Stocks

The Application of Linear Programming to Management Accounting

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Exam 12: Decision-Making Under Conditions of Risk and Uncertainty

Which of the following is NOT a feature of a probability distribution?

Which of the following assumptions apply when making decisions on the basis of expected values:

The following represent a tutor's estimate of the probability of students A, B, C and D failing an examination. Which student does the tutor consider has the best chance of passing the examination?

The expected value represents:

Which of the following represent states of nature?

Which of the following best describes objective probabilities?

Introduction to Management Accounting

An Introduction to Cost Terms and Concepts

Cost Assignment

Accounting Entries for a Job Costing System

Process Costing

Joint and By-Product Costing

Income Effects of Alternative Cost Accumulation Systems

Cost-Volume-Profit Analysis

Measuring Relevant Costs and Revenues for Decision-Making

Activity-Based Costing

Pricing Decisions and Profitability Analysis

Capital Investment Decisions: Appraisal Methods

Capital Investment Decisions: the Impact of Capital Rationing, Taxation, Inflation and Risk

The Budgeting Process

Management Control Systems

Standard Costing and Variance Analysis 1

Standard Costing and Variance Analysis 2: Further Aspects

Divisional Financial Performance Measures

Transfer Pricing in Divisionalized Companies

Cost Management

Strategic Management Accounting

Cost Estimation and Cost Behaviour

Quantitative Models for the Planning and Control of Stocks

The Application of Linear Programming to Management Accounting

Filters