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Linus Mosesadmin

Asked: May 9, 20232023-05-09T16:23:33+02:00 2023-05-09T16:23:33+02:00In: Management Accounting 310 - GMA711S

Test 2 2023 ,MANAGEMENT ACCOUNTING 310 (GMA711S)

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Question 1
The Dean Viljoen Lodge thereafter DVL) is situated inside the Daan Viljoen Natural Wildlife Park, approximately 20 meters from Windhoek. The lodge offers nineteen (19) unique African “kraal” inspired chalets with a choice of facies at each chalet or scrumptious meals at the Boma restaurant overlooking a large swimming pool. The lodge further offers conference facilities, meeting venues, wedding facilities, walking trails, and game drives inside the Park The manager of DVL is considering whether to open on 21 March, a public holiday (Namibia’s dance Davi, a day when the lodge has, in previous years, been closed. The lodge has a daily capacity of 1,200 visitors. if the lodge opens for business that day, it will incur additional specific fixed costs of N$29 000. the contribution from the sale of park entrance fees would be N$15 per visitor. The Number of visitors is uncertain but based on past experiences. It is expected that there is a 50% probability of receiving 900 visitors, a 20% probability of receiving 500 visitors, and a possibility of receiving 1 000 visitors.

Question 2

Human Drilling Contractors is considering drilling for oil in the Kavango region. The probability of finding oil is dependent on whether or not an initial exploratory study is undertaken. If no study is undertaken, and the company decides to drill, there is a 12% chance that oil will be discovered, generating a total income of N$50 million. The cost of drilling will be N$8 million. If a study is undertaken at a cost of N$200 000, there is a 10% chance that the study will be favorable. Should the study show favorable results, the probability of finding oil is 95%. The total income generated from the discovery of oil is N$50 million at an N$8 million cost of drilling. If the study is undertaken, and the results show a low likelihood of oil existing, the company may choose to drill, but the probability of discovering oil is 5%.

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