Need help with production budget question

So Sales budget is easy predicted number sold x sale price = 3000 x 40 = £120,000

For the production budget you need to first work out how many units are needed assuming no defects.

Number to sell - Opening Inventory of finished units + Closing Inventory of finished units required

You are told that you have 20% of the units you require 3000*0.2 = 600 there is an unstated assumption that the closing inventory rule was met previously. You need 3400*0.2=680 units ready for the next period. This means you need:

3000 - 600 + 680 = 3080 units of goods for the period. However 3% of finished goods are defective so the 3080 makes up 97% of total goods made.
3080 * 3/97= 96
3080+96 = 3176

I hope this helps for the production budget. If you need the next bit let me know and I'll expand my answer but the general process is the same.