1. avatar says

    sir plz explain how to ansr of this qs. and this Qs is of which topic.

    ABC co has a manufacturing capacity of 10000 units. the flexed producion cost budget of the company is as follows.

    capacity 60% 100%

    total production cost $ 11280 $ 15120

    • Profile photo of John Moffat says

      We don’t design our lecture notes round the BPP book – we design them round the syllabus :-)

      The examiner calls it ‘statistical techniques’ in the syllabus, and they are all covered in Chapters 17, 18 and 19 of our Course Notes.

    • avatar says

      Please help me with Production budgeting. If budgeted sales (aka Sales requirements derived from market demand) equals 4000 units; Opening Inventories equal 950; Closing inventories equal 1000. Why is the Production requirement = Sales requirement + Increase in finished goods inventory? (Calculating to 4050 = 4000 + 50 where 4050 is the Production requirement) I don’t understand how production requirement relates to opne and closing inventories

      • Profile photo of John Moffat says

        But where do you think that the inventories come from? We have to produce them.
        If we did not keep inventories then we would need to produce 4000. Here we do keep inventory and we want to increase it by 50 and so we need to produce an additional 50.

      • avatar says

        I understand that we need to produce them. I don’t understand why we use closing and opening inventories’ difference as the amount we want to increase/decrease it with. Why not use a % of previous sales for example?

      • Profile photo of John Moffat says

        There are no rules as to how a company decides on the level of inventory that it wants – there are many factors that they might consider. They might look at past demand, although more sensibly they would look at expected future demand. In exams you cannot be expected to decide yourself – you will be told how they intend to change the inventory and you follow the instructions.

  2. Profile photo of accakeisha says

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