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John Moffat.
John Moffat.-
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czxy
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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 $50600And the correct answer given in the book is option C $ 50200. The question is from bpp practice and revision kit.
John Moffat
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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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