Budgeting Task 4 (a)
Mjepson2
Registered Posts: 2 New contributor 🐸
Hello,
I am having a problem trying to work out this question. This should be bread & butter but my mind has gone blank so it's probably quicker to ask...
Materials - Each unit produced requires 0.75kg of material. Closing inventory will be valued at the budgeted purchase price.
Production Budget
Opening Inventory of finished goods - 92,400 units
Production - 589,000 units
Sub Total - 681,400 units
Sales - 600,000 units
Closing Inventory of finished good - 81,400 units
Materials Kg £
Opening Inventory 50,000 60,000
Purchases 460,000 598,000
Sub-Total 510,000 658,000
Used in Prdn.
Closing Inventory
Please can someone explain how the the used in prdn & closing inventory is valued?
I multiplied the closing inv. of finished goods by the material requirement (81,400 x 0.75) however my answers differ to the sample answers.
Many thanks,
Mark
I am having a problem trying to work out this question. This should be bread & butter but my mind has gone blank so it's probably quicker to ask...
Materials - Each unit produced requires 0.75kg of material. Closing inventory will be valued at the budgeted purchase price.
Production Budget
Opening Inventory of finished goods - 92,400 units
Production - 589,000 units
Sub Total - 681,400 units
Sales - 600,000 units
Closing Inventory of finished good - 81,400 units
Materials Kg £
Opening Inventory 50,000 60,000
Purchases 460,000 598,000
Sub-Total 510,000 658,000
Used in Prdn.
Closing Inventory
Please can someone explain how the the used in prdn & closing inventory is valued?
I multiplied the closing inv. of finished goods by the material requirement (81,400 x 0.75) however my answers differ to the sample answers.
Many thanks,
Mark
0
Comments
-
I need a reply to this one too, I dont get it0
-
Dear Irod86
I think all the clues are in the task.
I've changed the sequence of the rows because they make it easier for me to explain- The kg used in production
589,000 units x 0.75 kg/unit = 441,750 kgs - The closing inventory in kgs
I put balance on the answer I used because you just find the difference between the sub-total and the kgs used in production
510,000kgs - 441,750kgs = 68,250 kgs - The purchase cost per kg
Take the total purchase cost divided by the kgs purchased
£598,000/460,000 = £1.30/kg - Find the value of the closing inventory
Total kgs in cl inventory x purchase cost per kg
68,250 kgs x £1.30/kg = £88,725 - Find cost of material used in production
Sub-total cost less value of closing inventory
£658,000 - £88,725 = £569,275
Sandy
sandy@sandyhood.com
www.sandyhood.com0 - The kg used in production
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