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Hi i have question on budgeting.
Its from the BPP book but i am confused with how they got the answer.
Company makes a component M which uses 3 kg of raw material X. Opening inventory of start of year is: 5,000kg ($4 a kg) and 3,000 units. Budgeted sales is 48,000 throughout the year (evenly). Closing inventory at the end of the year is:
Raw material x = one months worth of production
Units of M = 2 months worth of sales.i have managed to work our the closing units of m = 8,000 but the book has the closing inventory of material x to be (96,000/12) = 8,000. i do not know where they have got the figure 96,000 from?
please help
Several people have asked about this.
It is obviously a mistake by BPP. It should be 3 x 48000/12 kg = 12,000 kg.
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