Would like a detailed working of part (b) on how to get the closing and opening inventory.
Treehorn produces a single product. The cost card for this product is as follows:
Direct materials 3kg per unit at $6 per kg = 18
Direct labour 2hrs per unit at $10 per kg = 20
Fixed overhead 2hrs per unit at $2 per kg = 4
Total cost 42
notes
1. Treehorn prepares budgets on quarterly basis. Each quarter consist of 13 weeks,
with five working days per week.
2. Selling price is $56 per unit.
3. Treehorn incures no other cost than those included in the cost card.
4. It is Treehorn's policy to maintain an inventory of finished goods at the end of each quarter equal to five days' demand of the next quarter.
5. Because of its perishable nature it is not possible to hold raw material inventory.
6. Forcast sales units for the next five quarters are:
Quarter 1 1,950,000 units
Quarter 2 2,275,000 units
Quarter 3 3,350,000 units
Quarter 4 2,275,000 units
Quarter 5 1,950,000 units
Required
Produce the following budget for EACH of the quarters 1,2,3 and 4:
(a) A sales budget showing sales volume in units and sales revenue in $.
(b) A production budget showing opening and closing inventory, sales and production;
(c) A purchases budget showing purchases in kg and in $
Ask the Tutor ACCA MA
Budgeting ------detailed working for a question
7y ago#1Please do not simply set me test questions and expect an answer.
You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.
Have you watched my free lectures on budgeting (because I work through a similar example in the lectures)?
I haven't gotten an answer as of yet and yes i have watched your lectures on budgeting.
7y ago#3Sorry - but we do not provide answers to test questions.
You should be using a Revision Kit from one of the ACCA approved publishers. They contain answers and explanations. (And the questions are exam standard - the question you have typed could not be asked in that form in the real exam!)
If you were set this for homework, then we obviously do not do your homework for you :-)
When you get the answers, then by all means ask about whatever in the answer you are not clear about and then I will help you.
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