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BPP Revision Kit Question

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

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October 3, 2017 at 8:15 pm #409359
shahmir101
Member
- Topics: 14
- Replies: 4
Hi, I had a question from the revision kit. Budgeted sales of X for December are 18,000 units. At the end of the production process for X 10%of the production units are scrapped as defective. Opening inventories of X for December are 15000 units and closing inventories will be 11400 units. What is the production budget for X for December?(Question 16.8)
A 12960units
B 14400units
C 15840units
D 16000units
The book says the answer is D 16000 units
But I got C
Work:
(18000-(15000-11400)) = 144000
10% of 144000 = 1440
14400 + 1440= 15840 units
Could you please explain what I did wrong?
Thankyou
October 4, 2017 at 7:08 am #409395
John Moffat
Keymaster
- Topics: 57
- Replies: 54470
To be able to sell 18,000 units they need to have 18,000 – 15,000 + 11,400 = 14,400 units
These will only be 90% of the production because 10% are scrapped.
So they need to produce 14,400/90% = 16,000 units.
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