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Finished goods budget

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Finished goods budget

  • This topic has 3 replies, 3 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 11, 2019 at 4:23 pm #500866
    mango1991
    Member
    • Topics: 11
    • Replies: 15
    • ☆

    Wellyboot Manufacturing has two main products ‘Blue boot’ and ‘Red boot’.
    Both products use the same common material and labour but in differing proportions.

    The annual budget is broken down into four separate 13 week periods. The following information relates to the 13 week period ended 31 March 20X3.

    Marketing and production data

    Budgeted sales (volume in units). BB. RB
    850.1250

    Inventory levels at the start of the budget period.

    Finished goods
    BB – 165
    RB – 365

    At the end of the period inventory levels are planned as –

    • Finished goods of ‘BB’ should be 7 days sales volume.

    • Finished goods of ‘RB’ should be 14 days sales volume.

    • Assume a five day week for both sales and production.

    Calculate –

    Production budgets in units for ‘Blue boot’ and ‘Red boot’ products.

    Sir however my doubt Is how to calculate the closing stock of finished goods?
    The last adjusment of 7 days and 14 days. This is confusing. What do they mean by 7 days and 14 days of sales volume ?

    January 12, 2019 at 9:15 am #500946
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    It means having enough inventory to last for 7 or 14 days.

    The sales of BB are 850 for 13 weeks, which is 65 days. They are therefore selling 850/65 per day, and so to have enough inventory to last for 7 days means having 7 x 850/65 units.

    April 22, 2022 at 11:42 am #654266
    nishii
    Member
    • Topics: 0
    • Replies: 3
    • ☆

    what about the raw material

    April 22, 2022 at 3:30 pm #654297
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54662
    • ☆☆☆☆☆

    The question asks about the closing inventory of finished goods. Any raw material inventories are nothing to do with it.

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