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  1. avatar 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?

    please help me with this question with lil explaination.

    • Profile photo of John Moffat 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.

  2. avatar 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

  3. avatar 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

    • Profile photo of John Moffat 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 :-)

  4. avatar says

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    • Profile photo of adejumolu 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 ?

      • Profile photo of John Moffat says

        I am sorry that I never answered this question – I guess it is too late for you now.

        However, if you need help please post in the Ask the Tutor Forum.

        (The reason I missed this is that it is impossible every day to look at the comments beneath every lecture. However every day I do look at the questions in the Ask the Tutor Forum, and answer them)

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