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Hi My dear Tutor, I have a question.
A retailer forecasts that sales in the first month of the year will be 600000$ and will then grow at 4% per month for the next three months.it prices its products by adding a mark-up of 20% to its purchase price.the retailer always carries sufficient stock to cover the next month’s forecast sales.
What is the forecast inventory at the end of the second month of the year?
600000*1.042*100/120=540800
Where the figure of 1.042 has been derived?
Could you explain?thanks in advanceWherever you are copying the answer from, you have either misread or there is a typing error. Because it is not 1.042 but 1.04^2!!
The cost of sales in the first month will be 100/120 x 600,000 = 500,000.
Since they are growing at 4% per month, then in the second month they will be 500,000 x 1.04, and in the third month they will be 500,000 x 1.04 x 1.04 (or 500,000 x 1.04^2).
So the inventory at the end of the second month will be 500,000 x 1.04^2 = 540,800
Hi tutor. I have a question relating to budgeting chapter. There is no lecture relating to how to prepare master budgets. Other than cash budgets there is no lecture video on how to prepare budgeted statement of profit and loss and statement of financial position.
No – there is no lecture on preparing master budgets and there will not be, because you are not asked in the exam to prepare master budgets.
It is the functional budgets that are important for the exam (and the budgeted statement of profit and loss is only a summary of these anyway!) and of course there is a lecture on these.
The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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