CIMA Management Accounting P1 Question # 38 Topic 4 Discussion

CIMA Management Accounting P1 Question # 38 Topic 4 Discussion

P1 Exam Topic 4 Question 38 Discussion:
Question #: 38
Topic #: 4

RS is a travel company providing daily tours of a major European capital city. The market is highly competitive and RS has commissioned some market research to help with the pricing decision for a new tour. The research identified the probability of three possible market conditions and the number of tickets that would be sold each day at three different price levels.

P1 Question 38

Demonstrate, using a decision tree and based on expected value, which ticket price RS should choose.


A.

RS should charge a ticket price of $70.


B.

RS should charge a ticket price of $80.


C.

RS should charge a ticket price of $90.


D.

RS should charge a ticket price of $100.


E.

RS should charge a ticket price of $75


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