Answer (C) is correct . Ming’s required production for the year can be calculated as follows: Projected sales 6,300 Add:? projected ending inventory 590 Less:? beginning inventory (470) Production 6,420 Since 10% of all units produced do not pass inspection, Ming must produce 7,133 units (6,420 ÷ 90%).
Answer (A) is incorrect because The figure 6,890 is simply the sum of projected sales and ending inventory without taking account of the 10% spoilage.
Answer (B) is incorrect because The figure 7,062 results from merely adding the projected sales and end-of-year buffer and subtracting ending inventory and multiplying the result by 110%; the 110% does not apply to the 470 units in beginning inventory because that number is after the spoiled units were deducted in the previous period.
Answer (D) is incorrect because The figure 7,186 results from dividing projected sales and projected ending inventory by 90% before calculating desired production.
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