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A business has budgeted for a greater quantity of material in its material usage budget than it has in its material purchases budget. Which of the following statements can be inferred from this situation?
Finished goods inventories are budgeted to increase
? Finished goods inventories are budgeted to decrease
? Raw materials inventories are budgeted to increase
? Raw materials inventories are budgeted to decreaseAnswer is the last option – Kindly help sir
Suppose they had budgeted on using 1,000 kgs of material, but had only budgeted on buying 800 kgs. The other 200 kgs the intend using must come from somewhere and can only be coming from the inventories, which means the inventories will be expected to reduce by 200 kgs.
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