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Hi,
I found this question from the Revision kit.
A Co. makes a a component m which uses 3 kg of material X> The opening inventory at the start of next year is expected to be:
Opening inventory of raw material X 5000kg @4
Opening inventory of component m 3000 units.Budgeted sales of M are expected to be 48000 units(evenly throughout the yr)
Closing inventory of raw material x 1 months worth of production
Closing inventory of Component m two months worth of salesWhat is the material X purchases budget for the year (in kg)?
Please, Sir Could you help me with this.
Surely there is an answer in your Revision Kit?!!
You need to calculate the budgeted production by adjusting the budgeted sales by the opening and closing inventories of the component.
When you have the budgeted production you can calculate the materials needed (at 3 kg per component).
Then you can calculate the purchases by adjusting the materials needed by the opening and closing inventories of material.
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