June 13 Q1 – Help

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November 17, 2013 at 6:32 pm #146487
Avish
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”This investment will increase production capacity by 9000units per year and all of these units are expected to be sold as they are produced”.

The examiner answer demonstrate that units each year 9000.

Wondering why it should not increase by 9k each year.
i.e Y1 9000 Y2 18000 Y3 27000

Thank you
November 17, 2013 at 8:41 pm #146508
neilsolaris
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While you’re waiting for the official answer, I thought I’d butt in and offer my opinion.

I think what they mean, is that the machine will increase the capacity by 9000 units in excess of the previous capacity (i.e. before the machine is purchased). It doesn’t mean an extra 9000 units year on year.

I agree this question is quite confusing though. The working capital element threw me.
November 18, 2013 at 9:25 am #146557
Avish
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I’ve got you’re point.

Thanks you very much.
November 18, 2013 at 12:28 pm #146588
John Moffat
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neilsolaris is correct.

The examiners wording is actually correct english – learn from it because he has used the same wording in several question.
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