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Hi sir
How do you work this out?Thanks.A company manufactures and sells a single product.
At the end of the process, all units are inspected and 20% are rejected and scrapped.
Next year the budgeted sales are $384,000 and the inventory of finished units will increase by 4,000 units.What is the next years budgeted production that will be subject to inspection?
A 475,000 units
B 388,000 units
C 485,000 units
D 380,000 unitsFor every 100 produced, 20 are scrapped and therefore only 80 are ‘good’.
So for every 80 ‘good’ units they need to produce 100.
So for 384,000 + 4,000 = 388,000 good units, they need to produce 100/80 x 388,000 units.
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