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- This topic has 6 replies, 2 voices, and was last updated 1 month ago by
John Moffat.
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- April 20, 2025 at 11:38 am #716855
Hello sir,
This question is based on the lecture notes (chapter 26 example 1) where we have to prepare a flexed budget.
In the question, it is mentioned that there is no opening inventory.
If there is an opening inventory, will it be correct if I added the opening inventory+ this month’s production and then calculate the materials, labour and both the overheads?
For now, the question says
Production: 8700
Materials (4kg at 4.50): $ 18Say there is an opening inventory of 200
So in my fixed budget, to calculate materials used, it’ll be 8900*18 and not 8700*18? Thank you so much sir and I apologise for the long question.
April 21, 2025 at 7:32 am #716865No. Given that the question says that they produced 8,700 the cost of the labour and overheads to produce will be based on 8,700.
April 21, 2025 at 2:59 pm #716876Thank you, sir. Does this mean that having an open inventory will make no difference to the fixed and flexed budget?
April 21, 2025 at 5:29 pm #716880Not in the situation that you describe.
April 23, 2025 at 1:35 am #716901Thank you so much sir ?
April 23, 2025 at 1:46 am #716902Thank you so much sir 🙂
April 23, 2025 at 2:07 pm #716911You are welcome 🙂
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