Wimpole Ltd PCR - help

noodles

Budgeted sales volumes 2000 Alpha 3000 beta
Opening finished stocks 300 alpha 297 beta
closing finished stocks 500 alpha 595 beta

Material per unit 10.00 alpha 12.00 beta
labour hours per unit 1.150 alpha 1.380 beta

cost of material per metre £17.00
opening material stock 8750
closing material stock 15530
wastage rate of material 3 % of material issued to production

46 employees work a guaranteed 35 hour week. gauranteed wage is £210.00 per week. any overtime neccessary is paid at £8.00 per hour

maximum amount of material available is 61,580

betas sales volumes must be provided under the contract.

What are the meters of material available for production before any wastage? 54,800 metres
What are the metres of material required for beta production including wastage? 40,800 metres
what are the metres of material available for alpha production? the difference 14,000 metres
Number of Alpha's to be produced? 13,580 Alphas



i am trying to understand where some of these numbers come from.
Q - why do you add o stock and less c stock when in the studying i am doing re this it tells you to deduct opening and add closing to get to the production, this is confusing me and I need to understand it before i move on.
O stock 8750
Purchase 61580
C stock -15530
Material available for production - metres 54800

Rinske

Hi,

The reason the stock is different from what you have learned is that you normally have a production available and base how much you need to buy on the production less opening stock (already there) and plus closing stock (so it's there before you start in the next period).

However, in this question you need to calculate how many materials you have available. As the opening stock is available and the closing stock is something you can't use in the period, because you need it for the next period, this is why you add the opening stock and deduct the closing stock from the materials purchased.

Does that help at all?

noodles

thank you so much for that clear explanation. I shall press on with the next part of the paper