help with practice cba again
jojo1979
Registered Posts: 75 Regular contributor ⭐
Hi all,
Have any of you done the second practice cba for budgeting? Im a bit stuck on one of the questions and am not sure how it is worked out. Any help would be appreciated. The question is
This years budget for raw materials was set at £216300. THis assumes a 3% increase int he production volume and a 5% increase in raw material prices comapred with the previous year.
However production volume is 10%higher than the previous year and there has been no price increase.
Calculate the material cost forcast
The answer is £220000
x
Have any of you done the second practice cba for budgeting? Im a bit stuck on one of the questions and am not sure how it is worked out. Any help would be appreciated. The question is
This years budget for raw materials was set at £216300. THis assumes a 3% increase int he production volume and a 5% increase in raw material prices comapred with the previous year.
However production volume is 10%higher than the previous year and there has been no price increase.
Calculate the material cost forcast
The answer is £220000
x
0
Comments
-
Hello Jo
I think the way to calculate the answer is as follows:-
You are advised that the raw materials budget is £216,300 which assumes a 3% increase in the production volume and a 5% increase raw material prices compared with the previous year.
You need to strip out the assumption of 3% increase in production volume and 5% increase in raw material prices to take you back to the original amount for last year - so we have £216,300 / 1.03 / 1.05 = £200,000
You are then advised that production volume is 10% higher than the previous year and there has been no price increase. Therefore, last years figure of £200,000 x 1.1 = £220,000.
Hope this helps
JC~ An investment in knowledge always pays the best interest ~Benjamin Franklin0 -
Hi Jo
Yes it helps very much, thank you. I get it now. Was having a mental block i think. Thank youxx0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 156 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 92 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 274 Tax
- 136 Bookkeeping
- 7.2K General accounting discussion
- 201 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership