Question 1

**Section A**

HopeFoundation, an NGO, is planning a fundraising campaign. The management accountant has estimated the following probabilities for the net funds raised:

- 30% probability of raising $50,000
- 50% probability of raising $30,000
- 20% probability of raising $10,000

Calculate the Expected Value (EV) of the funds raised.

*(Enter your answer as a whole number without the dollar sign or commas)*

Accepted Answer

Multiply each outcome by its probability and sum the results: (0.30 * 50,000) + (0.50 * 30,000) + (0.20 * 10,000).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Simply averaging the three outcomes ($50k+$30k+$10k)/3 = $30k, ignoring the probabilities.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA MA — Management Accounting Practice Exam 6

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