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This topic contains 6 replies, has 4 voices, and was last updated by ying0423 1 year, 3 months ago.

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May 16, 2014 at 4:17 pm
Greetings people. I have a question that requires your kind attention.
Product X requires 1.8 kg of a raw material per finished unit. The material has a weight loss of 10% in preparation for manufacture. Inventory of the material is currently 420 kg but needs to be increased to 500 kg. 2,000 units of Product X are to be manufactured.
How many kg of the raw material needs to be purchased to satisfy the above requirements?
I would appreciate it if someone is able to solve it and provide a brief but compact explanation regarding the solution. Thank you.
May 16, 2014 at 5:15 pm
Hi.
To answer this question, you have to know 2 things:
1. how compute the total amount needed for the required production
2. the formula which calculates the material purchases, which is as follows:Mat’l Purchases=Mat’l Usage + closing bal – opening bal.
Lets do this:
1.
1a. Input wastage = output.
this shd make sense to u.
1b. Now, if one unit takes in 1.8kg, you need 2000 x 1.8=3600 kg of material.
1c. what will be actual material u need to account for the 10% wastage? to answer this, lets apply the formula:
input – wastage = output
input – 10% x input = output
0.9 x input= 3600
input = 3600/0.9=4000 kg(you can check the answer by deducting 10% of 4000 and see u get 3600)
2. No we apply the formula that you learnt in MA1 paper:
Mat’l purchases = mat’l usage + cl bal – op bal
Mat’l Purchases = 4000 + 500 – 420 = 4080hope this helps
May 17, 2014 at 4:16 am
Thank you so much kind sir!!! I didn’t think that you’d need to compensate the weight loss of the material by preparing more material than is required. I totally understand now. Yes it has indeed helped me a lot and it was very easy to understand. You seem to be really good at material costing. I am very grateful for your help.
December 10, 2015 at 6:09 am
input – 10% x input = output
“input” is a variable… i cd have written it as
x – 10%x = output
x – 0.1x = output
x(10.1) = output
0.9x=outputMarch 5, 2016 at 5:12 am
i also confuse why is 0.9
thanks mansoor explaine ?but izit have more easier way to calculate the 0.9? 
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