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Al Fathma LLC manufactures a line of equipinen this year, which also has a one-year quarantee if the equipment fails. Based on experience, 25% of the items sold are returned for repairs. Minor defects-35% of the items returned can be repaired at a cost of OMR 120. Major defects - 65% of the items need significant repair at a cost of OMR 150. What should be the amount of provisions to be made in case of minor defects?

Al Fathma LLC manufactures a line of equipinen this year, which also has a one-year quarantee if the equipment fails. Based on experience, 25% of the items sold are returned for repairs. Minor defects-35% of the items returned can be repaired at a cost of OMR 120. Major defects - 65% of the items need significant repair at a cost of OMR 150. What should be the amount of provisions to be made in case of minor defects?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Al Fathma LLC manufactures a line of equipment that it sells to wholesalers. The company sold 3,000 items of this type this year, which also has a one-year guarantee the equipment fails. Based on experience, 25% of the items sold are returned for repairs. Minor defects - 35% of the items returned can be repaired at a cost of OMR 120. Major defects - 65% of the items need significant repair at a cost of OMR 150. a. What should be the amount of provisions to be made in case of minor defects? None of the listed choices OMR 31,500 OMR 306,000 None of the listed choices OMR 180,000 OMR 126,000 OMR 73,125 Vhat should be the amount of provisions to be made in case of major defects? OMR 306,000
Transcribed Image Text:Al Fathma LLC manufactures a line of equipment that it sells to wholesalers. The company sold 3,000 items of this type this year, which also has a one-year guarantee the equipment fails. Based on experience, 25% of the items sold are returned for repairs. Minor defects - 35% of the items returned can be repaired at a cost of OMR 120. Major defects - 65% of the items need significant repair at a cost of OMR 150. a. What should be the amount of provisions to be made in case of minor defects? None of the listed choices OMR 31,500 OMR 306,000 None of the listed choices OMR 180,000 OMR 126,000 OMR 73,125 Vhat should be the amount of provisions to be made in case of major defects? OMR 306,000
What should be the amount of provisions to be made in case of major defects? None of the listed choices OMR 31,500 OMR 306,000 None of the listed choices OMR 180,000 OMR 126,000 OMR 73,125 OMR 306,000
Transcribed Image Text:What should be the amount of provisions to be made in case of major defects? None of the listed choices OMR 31,500 OMR 306,000 None of the listed choices OMR 180,000 OMR 126,000 OMR 73,125 OMR 306,000
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