Operating Budget question help

emma89

Hi,

This might be a really stupid question but im stuck on how to work out raw materials ready for the operating budget, ive put the question below!

Production Budget
Opening inventory of finished goods 3000 units
production 28000 units
Sub total 31000
sales 30000
closing inventory of finished goods 1000

Each units takes 1.25kg of material. Closing inventory is valued at budgeted purchase price

Opening inventory of raw mat 1800 kg £7200
purch of raw mat 34000kg £136000
sub total 35800 £143200
used in prod ? ?
closing inventory of raw mat ? ?

The answers say that used in prod is 35000kg and £140000 and closing inventory of raw mat is 800kg and £3200 but i don't know how to get there!!!

Marga

Hello

Remember the T account
DR side what we have in
Opening Material (what we had at the beggining) 1,800 Kg
Purchases (what we brought in) 34,000 Kg
Subtotal 35,800 Kg

CR what leaves
Material used in production
Closing material

Therefore the credit side is 35,800 Kg how is this split?
Well production was 28000 units at 1.25 Kg per unit = 35000 kg used for the units which leaves 800 kg as the closing stock

hope that makes sense and helps

emma89

You are a star!!! Thanks can't believe i didn't think of that. Thank you

Marga

emma89 wrote: »

You are a star!!! Thanks can't believe i didn't think of that. Thank you

no problem glad it helped

i find the T accounts VERY helpful and i use them in nearly everything!

emma89

I don't don't know how ive passed the first couple of years im hopeless!