AAT Level 4 Budgeting - Task 1.3 - HELP!!

Registered Posts: 1
AAT Level 4 Budgeting - Task 1.3 - HELP!!

I am really confused on where the numbers are coming from to figure out the closing inventory of finished goods

I get that it's total goods produced + opening inv - closing inv but I just don't seem to be able to get to the correct number!

I think I may be getting the total good produce number wrong or something?!

Could someone please explain the task and how the numbers are calculated?

Thanks you!

• Registered Posts: 41
Not sure which one you're doing but I'm using the figures from the 1st sample assessment:

Opening inventory is given as £150,000

Cost of production is the figures from the working schedules - Materials £569,275; Labour £514,800; Overheads £211,725. Total = £1,295,800

In the notes it says "Closing finished goods inventory will be valued at the budgeted production cost per unit", so the cost of production above divided by the units produced in the very first table ie £1,295,800 / 589,000 = £2.20 per unit. In the same table it says the closing inventory of finished goods is 81,400 units so multiplied by £2.20 = £179,080
• Registered Posts: 3 New contributor ?
AAT Level 4 Budgeting (2016 standards) - Online practice Assessment 1.2.

Becco I was stuck in exactly the same question as I am now!

Thank you

Kirsty
• Registered Posts: 3 New contributor ?
Spoken to my tutor and for anyone else stuck on this. You need to take the production and divide by the decimal of the reject rate. Reject rate is 8%, so devide 68,700 by 0.92 to get 74,674. Then divide this answer by 100 and multiply by the 8 (8%).

Eg:

Reject rate: 8% (leaving 92% good production)
Good production: 68,700

68,700 74,674
--------- = 74,674 --------- x 8 = 5,974
0.92 100

I found laying it out like this helped me to:

%
8 - 5,974 - Rejected
92 - 68,700 - Good production
-----
100 - 74,674 - Total manufactured units

Hope this helps!

Kirsty
• Registered Posts: 3 New contributor ?
Spoken to my tutor and for anyone else stuck on this. You need to take the production and divide by the decimal of the reject rate. Reject rate is 8%, so devide 68,700 by 0.92 to get 74,674. Then divide this answer by 100 and multiply by the 8 (8%).

Eg:

Reject rate: 8% (leaving 92% good production)
Good production: 68,700

68,700
--------- = 74,674
0.92

74,674
--------- x 8 = 5,974
100

I found laying it out like this helped me to:

%
8 - 5,974 - Rejected
92 - 68,700 - Good production
-----
100 - 74,674 - Total manufactured units

Hope this helps!

Kirsty