The Demand for a Product Varies from Month to Month

question 11

Short Answer

The demand for a product varies from month to month. Based on the past year's data, the following probability distribution shows MNM company's monthly demand.
$$\begin{array} { c c } \text { x } & \text { fx) } \\\text { Unit Damand } & \text { Prabability } \\0 & 0.10 \\1,000 & 0.10 \\2,000 & 0.30 \\3,000 & 0.40 \\4.000 & 0.10\end{array}$$
a. Determine the expected number of units demanded per month.
b. Each unit produced costs the company $8.00, and is sold for $10.00. How much will the company gain or lose in a month if they stock the expected number of units demanded, but sell 2000 units?

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Definitions:

Accounting Information

Data related to the financial transactions and status of an individual, business, or other entity, crucial for making economic decisions.

Subsidiary Ledger

A ledger containing individual accounts with a common characteristic.

Control Account

A general ledger account that summarizes the total amounts recorded in various subsidiary ledgers for easier and consolidated reporting.

Accounting System

A comprehensive process of collecting, recording, classifying, and summarizing financial information for business transactions.