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Material usage budget

A material usage budget calculates the material required for planned production using the specification and any wastage allowance. It concerns materials consumed, not purchases, because opening and closing raw-material inventory affect the purchasing requirement. Where a proportion of input is lost, divide the required good quantity by the expected yield rather than adding the loss percentage mechanically. State whether the standard quantity already includes normal waste.

Worked example

Producing 1,000 good units requires 2 kg each, with 10% of input lost. Gross material input is 2,000 ÷ 0.90 = 2,222.22 kg, assuming no other loss allowance.

Common mistake

Adding 10% to good output gives 2,200 kg and understates input when 10% of input is lost.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027