Budgeting part 2 – ACCA Management Accounting (MA)
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Grand master Sensei John Thanks for your tremendous explaining
Thank you for your comment 馃檪
Hello John, thank you for the lecture..I’m missing something on inventories of finished goods, and how much of production is required. We produce more to cover sales as well as the units in closing inventory. But what about opening inventory? Is it correct to assume we already had some units finished? Please help me understand.
Thanks.
We need to oder enough to cover the production plus the increase in inventory (i.e. the difference between the closing and the opening inventory).
Okay, I get it. This means a decrease in inventory means we produce less?
Thank you for the lecture.
Yes, that is true 馃檪
Hello sir ,its relly nice lecture .?? … kindly, i miss one point..why we are add the difference between closing and opening inventory on sales unit to get production.
Because they need to produce enough units to cover the number they are selling but also to be able to increase the inventory.
Sir, is there a lecture on Master Budget?
It is mentioned in the lectures on budgeting, but it certainly does not need a separate lecture !!
HATS OFF, Sir!!
Hi, some clarification needed.
Inventories of raw materials.
Wood (kg)
Opening: 21,000
Closing: 18,000
Why does this mean that only 3000kg of wood is left in the inventory of raw materials but not 3000kg of wood is being used from the inventory of raw materials?
It does not mean that only 3,000 kg is left. It means that 3,000 kg of the wood used during the period came from inventory and therefore only the remainder of the wood used needed to be purchased in this period.
I really appreciate how time saving it is to consider reduction in inventory to calculate purchase amount
I thought I would have a go before watching the lecture and I went through a series of annoying, time consuming calculations
I.e. 21,000 opening – 29300 used + 26300 purchased = 18000 closing instead of 29300 usage – 3000 reduction in inventory = 26300 purchase quantity
felt so silly after seeing you just subtract 3000 and go straight from opening to closing.
Indeed one of the best lecture. THANKS JOHN AND BE BLESSED
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BPP kit- 30.1(MTQ)
question no: c,d
I’m having trouble finding the closing inventory of raw materials X!
My calculations: (159000梅12=13250) but,
In answer: (96000梅12=8000)
Why? Struggled a lot!
You must ask the kind of question in the Ask the Tutor Forum and not as a comment on a lecture.
Thank you sir for your guidance but how do we deal with change in inventories when there is a decrease in inventory in calculations of budgeted production units?
Dear John,
Thank you alot for the time you invest in making this lectures possible.
Just a question please, why is the inventories of finished goods also included in the material usage budget (quantities) when solved for?
By finished goods, it is meant to have been produced with wood and coated with varnish, so I do not yet understand why it is included in the solving for material usage budget.
I will appreciate your response to this.
They need wood and varnish for all the units that they produce.
We know how many units they will sell, but some of them are already there in inventory so these do not need producing again. However if they want to end up with inventory of finished goods then these need to be produced as well.
the best lectures available, thanks a lot.
Thank you for your comment 馃檪
In the video where we need to adjust the inventory, what happens if we are given just opening Inventory or just closing inventory, how do i go about adjusting or not adjustment would be needed in that case?
It would always mean cost per kg unless the question specifically said differently.
13:44 Referring to ‘Standard Cost of Raw Material’ I’m not sure it’s clear on the example that this means ‘Standard Cost of Raw Material (per kg/litre)’. Is it correct for us to assume that this is implied if similar wording occurs in an ACCA question for example? And is it likely this is how it will be worded? Many thanks.