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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.
No. 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.
Thank you, sir. Does this mean that having an open inventory will make no difference to the fixed and flexed budget?
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