PCR - Wastage

mi|kshake

Hi,

When you're asked to prepare a production budget (in units) in the PCR papers, how do you know if you're supposed to include wastage or not? I've seen budgets which include wastage and ones which don't include it - even if the wastage % is given - in past papers.

Thanks!!

mi|kshake~

LJ1

Hello,

It depends when the wastage occurs:

If it says a % of finished goods are wasted you will need to incl in Production Budget in order to ensure you have enough good production for your sales and stock.

If it says a % is wasted during production you need to ensure you have accounted for the fact you need more material because some will be wasted during production to make your goods

Hope that makes sense

mi|kshake

Thanks - makes sense now! I just have to read the question lol.

mi|kshake~

LJ1

Your welcome!

Yeah I know what you mean, there are a lot of questions/info where it is unclear what they want.

Fi21

You always do wastage after opening and closing stock right?

mehmet

Yes.

You need enough "good" production in order to increase/decrease stock levels, so you should take into account the movement before calculating how much your wastage is.

Fi21

Thanks!