budget 2 — OpenTuition Forums

Ssaifudeen11y ago

each unit of product z requires 3 kg of rawmaterial and 4 direct labour hour . materialcosts $2 per kg and the direct labour rate is $7 per hour the production budget of z for april to june is as shown : april may june production 7800 8400 8200 raw material opening inventories are budgeted as follows : april may june 3800 kg 4200 kg 4100 kg the closing inventory budgeted for june is 3500 kg material purchase are paid for in the month following purchases . what is the figure to be included in the cash budget for june in respect of payments for purchasses ?? sir the how to do the question ? just think of my effort of typing the question . please help me by giving brief descrription !!! :)

Ssaifudeen11y ago#1

SECOND QUESTION : wages are paid 75 % in the month of production and 25% in the following months . what is the figure be included in the cash budget for may in respect of wages |?

John MoffatTutor11y ago#2

You know the production in each month, and so you can calculate the raw materials needed for production (by multiplying by 3kg). You know the opening and closing inventories each month, and so you can calculate the purchases need each month in kg. When you know the purchases, you can calculate the cost by multiplying by $2 per kg. Since purchases are paid in the month following, then for the June payment you need the May purchases figure. (and think of my effort in typing answers to over 100 questions a day!!) :-)

John MoffatTutor11y ago#3

Second question: Same approach as the first, except that obviously inventories are not relevant. The payment in June will be 75% of the about cost of June plus 25% of the labour cost of May.

Ssaifudeen11y ago#4

can i know the opening and closing inventory in numericals because in answer its given closing inventory is 4100 but how it can be 4100 can u explain it ?

Ssaifudeen11y ago#5

in second question : what you meant by the following months ? following month means it should be june ryt ? but in answer its given like 75% OF MAY WAGE COST AND 25% OF APRIL WAGE COST HOW DID THE GOT THAT ?

John MoffatTutor11y ago#6

You are trying to calculate the purchases in May. The question actually tells you the closing inventory for May!! (It is obviously the opening inventory for June).

John MoffatTutor11y ago#7

Sorry I misread the question. If you read my reply carefully you will see that I wrote down what the payment in June was. Now I see that it wanted the payment in May.