Question:
A company is preparing a production budget for the next year. The following information is relevant :
Budgeted sales 10000 units , opening stock 600 units , closing stock 5% of budgeted sales
The production process is such that 10% of the units produced are rejected.
what is number of units required to be produced to meet demand? (answer is 11,000units)
my working : sales unit 10,000 units + 500 units ( 10,000units x 5%) - 600 units + 990 units = 10890
please explain how to get answer 11,000 units ?
How to find produce unit and sales unit ?
If find the sales unit whether can be : produce unit + opening unit - closing unit ?
if find produce unit whether can be : sales unit + closing unit - opening unit ?
thank you
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budgets
11y ago#1Your workings for the budgeted good production are correct (9,900 units).
Because 10% of units produce are rejected, it means that for every 100 produced then 10 are rejected and only 90 are 'good'.
So...to end up with 9,900 'good' units, the actually need to produce 9,900 x 100/90 = 11,000 units.
if in the exam if I select answer 10,890 units whether examiner will give any mark ?
are you possible to correct me the below questions to you :
How to find produce unit and sales unit ?
If find the sales unit whether can be : produce unit + opening unit – closing unit ?
if find produce unit whether can be : sales unit + closing unit – opening unit ?
thank you
11y ago#3No - you get no marks for the wrong answer.
What you have written in your last two lines is correct.
I need help
Shop R Shop S Shop T
('000) ('000) ('000)
Sales 400 500 600
Contri 100 60 120
-(Fixed
Cost ) (60) (70) (70)
P/L 40 (10) 50
60% of the fixed costs are general company o/hs. These are apportionedto the shops on the basis of sales value. The other fixed costs are specific to each shop and are avoidable if the shop closes down
If shop S is closed down and sales of the other shops remained unchanged, what would be the revised budgeted profit for the company?
11y ago#5The total fixed costs are 200. So 60% (i.e. 120) are apportioned on sales value which means that to S would be apportioned 500/1500 x 120 = 40.
The remainder of S's fixed costs are 70 - 40 = 30, and these are specific to S.
If S is closed down, then we lose the contribution from S (which is 60), but we will save the specific fixed costs of S (which are 30).
You can calculate the existing total profit. The new total profit will be the existing profit minus 60 plus 30.
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