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Budgeting

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Budgeting

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • Author
    Posts
  • April 18, 2019 at 3:43 pm #513407
    czxy
    Member
    • Topics: 7
    • Replies: 4
    • ☆

    The following question’s answer is given in the book as 50200 which seems to be wrong . In the book 4100 has been taken as closing inventory and 4200 as opening inventory.
    So I want to confirm whether it is wrong or not.

    Question: Each unit of product Zeta requires 3 kg of raw material and 4 direct labour hours. Material costs $2 per kg and the direct labour rate is $7 per hour.
    The production budget for Zeta for April to June is as follows.
    April May June
    Production units 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 3900 kg.

    Material purchases are paid for in the month following purchase. What is the figure to be included in the cash budget for June in respect of payments for purchases?
    A $25100
    B $48800
    C $50200
    D $50600

    And the correct answer given in the book is option C $ 50200. The question is from bpp practice and revision kit.

    April 18, 2019 at 4:58 pm #513430
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    The answer in the book is correct.

    The payment included in the cash budget for June if the payment for the purchases in May (because purchases are paid in the month following purchase).

    In May, the opening inventory was 4,200 and the closing inventory was 4,100.

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    Posts
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