Law of Probability

Law of Probability

Question 1

The law of probability – states that for all statements S, the probability of ‘S’ should be between 0 and 1, e.g. ( 0 =< P (s) =< 1 )

Actual profits are higher than Budgeted.

P ( A >B )

Actual profits = Revenue – Expenses

2013                    316 449 668.60 – 313 395 191.59 = 3,054,477.01

2014                    354 423 628.83 – 344 734 710.74 = 9,688,918.09

2015                    396 954 464.29 – 379 208 181.82 = 17,746,282.47

Total = 30,489,677.57

Total budgeted profits = 30722000

Budgeted Revenue – Budgeted Expenses = Budgeted profit

Budgeted Revenue = Actual Revenue

Total budgeted profits > total actual profits

Therefore P ( A > B ) = 0

P ( A > B ) 2013 = 3,054,477.01 – 3,046,000

= 847701     x    100      

3,054,477.01

= 0.2775% or 0.002775

P ( A > B ) 2014 = 9,688,918.09 – 9,561,000

= 127918.09          x 100

9,688,918.09

= 1.32% or 0.0132

P ( A > B ) 2015 = 0 Since

budgeted profits are higher than actual profits

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Question 2

Hair stylist   ( 216 – 194 ) + 194 – 75 = 141

Nail technician  187 – 145 = 47

Salon manager =14

Beauty therapist = 94

Marketing manager = 1

Operation manager = 1

Finance director = 1

CEO = 1

Labor turnover = 141+47+14+94+4

= 295

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The Law of Probability

Question 1

Based on the above table, explain the law of probability and calculate the likelihood of your actual profits being higher than the budgeted profits.

Question 2

Mini Scenario

Perfect You Ltd, a high street beauty salon chain is suffering from a staffing problem. The following positions are available throughout the chain: Hair stylist, Nail Technician, Salon Manager and Beauty Therapist. There is also a Marketing manager, an operation manager, and a Finance Director in addition to the CEO at corporate level.

Last year, out of 216 hair stylists, 194 resigned and from 194 that replaced them, 75 already resigned. This is not only an issue with Hair Stylists, form the 187 Nail Technicians, 145 also resigned, and even though there is only 94 Beauty Therapists, 156 had to be recruited in the last 12 months. On the bright side, from the 14 Salon Managers, none of them had to be replaced.

1. Calculate the total labor turnover