LUMINOUS SHINING Co. recalled a product due to a possible defect caused by malfunctioning factory equipment. The products recalled will be repaired free of charge. LUMINOUS is uncertain whether all products recalled will have a possible defect. However, the following estimate was made by LUMINOUS’s engineers and managerial accountants and approved by the board of directors. Repair cost Probability 80,000,000 5% 60,000,000 20% 40,000,000 35% 20,000,000 40% 100% How much is the provision to be recognized? 

a. 38M

b. 48M. 

c. 50M

d. 32M

Answer rating: 100% (QA)

Calculation of Provision Repair Cost a ... View the full answer