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provision

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › provision

  • This topic has 3 replies, 2 voices, and was last updated 11 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
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  • June 19, 2014 at 9:41 am #177189
    abbas7796
    Member
    • Topics: 135
    • Replies: 254
    • ☆☆☆

    hello Mike

    i have a quick question regarding a provision question.

    the provision required for product warranty claims against 200,000 units of retail goods supplied with a one-year warranty

    70% of sales will have no claim
    20% of sales will require a $25 repair
    10% of sales will require a $120 repair

    i understand that we have to use the concept of expected value when we deal with large population.

    am i right is saying that the proviion for the above would be (70%*200,000 x nil) + (20% of 200,000 * 25) + (10% of 200,000 * 120) which is equal to 3400000?

    June 19, 2014 at 11:04 am #177200
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23345
    • ☆☆☆☆☆

    That’s what I get it to! Let’s both hope that it’s correct!

    June 19, 2014 at 11:07 am #177202
    abbas7796
    Member
    • Topics: 135
    • Replies: 254
    • ☆☆☆

    thanks mike.

    June 19, 2014 at 11:21 am #177205
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23345
    • ☆☆☆☆☆

    You’re welcome

  • Author
    Posts
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