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hi sir, please assist me with the below question
A company manufacturers and sell 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 384000 and the inventory of finished units increase by 4000 units. what is next year budgeted production that will be subject to inspection?
i got 388000 for my ans which is wrong
my working
384000+4000They do need to produce 388,000 ‘good’ units.
However for every 100 units they produce, 20% will be rejected and so they only end up with 80 ‘good’ units.
Or to put it the other way round, for every 80 good units, they will actually produce and inspect 100 units.So to end up with 388,000 good units they need to actually produce and inspect 100/80 x 388,000 units.
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