# Budgeting (tests)

1. says

The management accountant of a company is preparing the master budget for the next(period 5). the company manufactures and sells a single product (p) for which the following budgeted data are provided for the period.

Sales demand____________9500 units_______________________________________
Raw Mat required p.u of product
Mat M1__________________________2 k.g @ \$8.60 Per kg______________________
Mat M2__________________________1 litre @ \$10.20 Per litre____________________
total budgeted production cost p.u_______________\$ 46__________________________
_______________________________________________________________________Inventory of product p and of each raw material at end of period 5 needs tobe sufficient for 10% of the sales in period 6 when demand is expected to reduce to 9000 units.
what is the value of the total closing finished good inventory in period 5?

• says

The sales of p in period 6 will be 9,000 and therefore they need enough inventory at the end of period 5 to make 10% x 9000 = 900 units.

You know how much of each material is need for each unit, and you know the cost of each material, so it is just multiplying up to get the total cost of the material needed to make 900 units.

• says

No – there is no lecture on cash budgets.

Cash flow forecasts are part of capital budgeting and there are lectures on that (I am on
a plane at the moment so I cannot check, but from memory I think chapters 12 and 13

2. says

Hi, could anybody help me with one more question please?
The trend for the monthly sales (\$Y) is related to the month (t) by the equation Y=1500-3t where t=1 in the first month of 20×8. What are the forecast sales ( to the nearest dollar ) for the first month of 20×9 if the seasonal component for that month is 0.92 using a multiplicative model?
Thanks

• says

if 1 is the first month of 20×8, then the last month of 20×8 is 12, and the first month of 20×9 is 13.

So put 13 in the equation, and then multiply the answer by 0.92 to account for the seasonality.

• says

That’s great. Thank you very much your help.

3. says

Hi, Could anybody help me with this question please?
Using an additive time series model,the quarterly trend (Y) is given by Y=65+7t, where t isthe quarter (starting with t=1 in the first quarter of 20×5 ). If the seasonal component in the fourth quarter is-30, what is the forecast for the actual value for the fourth quarter of 20×6, to the nearest whole number?
Thanks,
Mia

• says

If 1 is the first quarter of 20×5, the the fourth quarter of 20×6 will be 8 (if you count the quarters).

So put t = 8 in the equation. Then because of the seasonality you need to subtract 30 from the figure that you get.

• says

Thanks again…. it makes sense now…..

4. says

dear tutor, u did nt give more explanation in master budgets. Does that mean we are not expecting them in the exam? plz help

• says

Master budgets can certainly be asked in the exam. However you cannot be asked to produce them – all you can be asked is what the master budget is likely to contain.

There are no rules about what is contained – it is up to the company to decide what is useful – but it will usually contain a budget income statement, a budget statement of financial position (balance sheet), a cash budget (usually monthly), and a capital expenditure (non-current assets) budget.

Again, there are no numbers that can be asked – only statement questions checking you know what it means.

There is no more explanation necessary

5. says

I REALLY APPRECIATED I HAD PROBLEM WITH BUDGETING IT REALLY HELPS. THANX. OPEN TUITION TEAM. YOUR REALLY A HELPER. I FAILD MY EXAM MANY TYMES NOT KNOWING HOW TO GET IN THIS PAGE AND LISTERN TO THE VIDEO CAUSE SOMETYME YOU DNT UNDERSTAND THE LECTURES IN CLASS BUT YOU WLL GET IT CLEAR WEN YOU WATCH THE VIDEOS.

6. says

Open tuition is God sent for somebody like me. Keep up the good work opentuition!!!.I know the God that rewards good deeds will surely bless you immeasurably. Cheers!!!

7. says

I read comment by spot interviews for best ACCA student who scored highest mark in ACCA. Some student have viewed opentuition and revision kits in studies.For me Opentuition is a great help for all student and it is free of charge.Anybody can view at any time and at any place in the world.We learn with same teacher who is universal .Excuse me if my english is not good.

• says

Excuse me sir, I need your help on this question. Thank you sir.
Each unit of the product made by ABC company requires 1.5kg of material. Next year’s production budget of ABC company is as follows:
Inventory at start of the year:
Raw material 7200kg
Finished goods 5400units
work in progress(75% complete as far as material content is concerned) 2700units
Budgeted sales for the year 90,000units
Planned inventory at the end of the year:
Raw material 9000kg
Finished goods 8100units
work in progress(50% complete as far as material content is concerned) 3600units
The number of kilograms of material that sholud be purchased next year(to the nearest kg) is ?

• says