Preparing Budgets: help with a question

Can anyone help solve the whole page in the picture attached. I have filled in the correct answers to the first part but I’m so unsure as to how they are calculated?
I’ve had a look at the answers for the next parts and I’m unsure as to how they were calculated as well.
Help is appreciated.
Thank you x

Best Answer

  • Pian32
    Pian32 MAAT Posts: 446
    Accepted Answer
    a)
    Starting with the kg side. You get the total available in the year and subtract what remains. 16,000 - 1,000 = 15,000 used
    £
    Closing inventory = amount * price per amount
    This is valued at purchase price = 35000/14000 = £2.50 kilo
    Closing inventory = 1000 * 2.5 = £2,500

    Value of used = 39,750 - 2,500 = 37,250 (same logic as for kg)

    Labour

    Available hours = 160 * 25 = 4000
    Hours required = 20,000 *0.25 = 5000 (15/60 = 0.25) converted minutes to hours

    Basic Time @8 = 4000 £32000
    Overtime 1000 £12000 (5000-4000)*(8*1.5)
    Total 5000 £44000


    Overhead
    Variable £2/hour 5000 £10000
    Fixed £7750
    Total £17750

    I hope this helps if you need any more clarification let me know
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Planned Sep 2021
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    milly1998

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