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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › provision
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?
That’s what I get it to! Let’s both hope that it’s correct!
thanks mike.
You’re welcome