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John prepares the following information for material purchase:
Sales. – 100units
Opening inventory of finished goods- 50units
Closing inventory of finished goods – 75units
Materials per unit. – 3kg
Labour hours per unit. – 4hrs
Opening inventory of raw materials – 300kg
Closing inventory of raw materials- 450kgWhat will be material purchases for John?
Please do not simply ask test questions and expect an answer. You must have an answer in the same book in which you found the question, and so you should ask about whatever it is in the answer that you are not clear about.
I assume that you have watched my free lectures on budgeting, in which case you will know what you can calculate the number of units produced (sales minus opening inventory plus closing inventory).
Once you have calculated the number of units produced, then multiplying by 3kg will give you the materials used. You can then calculate the materials purchased (materials used less opening inventory plus closing inventory).Please do watch the free lectures – I work through a very similar example in the lectures.
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