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Can anyone please help me calculate this question?
The budgeted costs for X Co for June are as follows:
Sales 20,000 units
Materials $120,000
Labour $200,000
Fixed overheads $350,000
Total cost $670,000If the budget is flexed for 30,000 units what will be the budgeted total cost?
First thing first when you flex a budget, you do not flex the fixed costs, in this case the fixed overheads will remain $350,000 even for 30,000 units. For all the other variable factors we will flex them to the flexed units. So in order to do that lets see the cost per unit for each i.e. Materials and Labours
Materials 120,000/200000= 6
Labour 200000/20000=10So for 30,000 units the costs will be
Material= 6*30,000=180,000
Labour=10*30,000=300,000Add the fixed overheads to the above costs and we will get total cost as (350+300+180)
$830,000Thanks you HazE for explaining.
I have another question , it’s a bit long. I’ll post it later.
So could you help me?The single product manufactured by Allegroup Co requires 2.5kg of a single raw material per unit of product. The material costs of $9 per kg.
budgets are being prepared and the following additional information is available:1. budgeted sales of the next three periods are:
Period 1: 38,600 units
Period 2: 26,500 units
Period 3: 32,100 units2. Opening inventory of finished goods in each period is budgeted to be 25% of the budgeted sales demand in that period.
3. Opening inventory of raw material in each period is budgeted to be one third of the budgeted material usage in that period.
A. Calculate the budgeted inventory of finished goods at the beginning of period 1.
B. Calculate the budgeted production volume of the product in Period 2.
C. If the budgeted production in Period 3 is 31,600 units and in Period 4 is 28,900 units:
* What are the budgeted purchases of the raw material in Period 3?
*What is the budgeted cost of the raw material usage requirement in period 4?D. It is possible that raw material availability will be restricted to 75,000 kg per period. If this situation arises, 75,000 kg of the material will be purchased and used in each period. Any sales demand not satisfied in a period would be lost.
Assume that the restriction on raw material supply occurs throughout the budget period and that there would be no inventory of raw material or finished goods at the beginning of Period 1. In this circumstance:
* What would be the finished goods inventory at the end of Period 2?Do you have the answers for the other from the book you got this question from??
I did workout answers for all the required questions but i need to cross check them by the actual answers and than explain them to you. Thanks
First of all i am glad that except one little hiccup,all other answers that i worked out were right. ( Pat on my back hehe)
Alright lets get down to solving them.
You worked out the first one and that is right answer and is pretty straight forward.
Now onto part B.
First you will have to remember that the opening work or opening units for one period will be the closing period for previous period.So in case of Period 2 when we want to calculate that how many units we will actually produce in the period we have to take account for the opening units of Period 3 as well because those will be the closing units for Period 2 so should be made in this period. I know it may sound confusing but will clear it with the numbers hereSo first we have to see how many opening units we got from Period 1, which as the question says is the 25% of the budgeted sales for the period so
Budgeted Sales for period 2 = 26500*25%=6625So these 6625 units were made in period 1 as there closing units. so we do not need to make these in Period 2. Now lets see how many closing units we need for Period 2 ( which will be the opening for Period 3)
Budgeted Sales for Period 3 = 32100*25%=8025As the Budgeted Sales for Period 2 is 26500 units, so the actual production volume we need for period 2 is
Actual production Volume= Budgeted Sales – Opening units + Closing units
26500 – 6625 + 8025
gives us 27900 unitsPart C of the question has 2 parts and the idea for the first one is similar to the Part B
its asking us for the budgeted purchases of raw material, so we will work it the same way that we will see how much we got already in the opening, so we do not have to buy that in this period and we will see how much there should be in closing which we need to buy along with the material that is required for current period production. So working isPeriod 3= 31600 units
Period 4= 28900 unitsEach unit requires 2.5 kgs and opening inventory of raw material for each period is one third of the usage of that period so for period 3
Opening raw material =31600*2.5= 790000/3 =26333 approx
Closing raw material= 28900*2.5=72250/3= 24083 approx
Material required for current period
Material required for current period prod. + Closing inventory – Opening inventory
79000 + 24083 – 26333gives us 76750 kgs
Part ii of C is simply asking for the cost of the raw material used.
Units made in Period 4
28900 units each unit requires 2.5 kg and each kg costs $928900*2.5*9 = $ 650,250
Now Finally on Part D
It says that regardless of what we require of Budgeted Sales, the maximum Material that we can get is only 75000 kgs. So in that sense raw material is the limited factor. So lets see how many units can we make for Period 1. As we know each unit will require 2.5kgs so75000/2.5 = 30000 units
We know that we require 38600 units according to out budget but can only make 30000 units so the rest is loss for us
For period 2 again we will get 75000 kgs and we will again make 30000 units but now the Budgeted sales is 26500 so at the end of the period we will have
30000 – 26500 = 3500 units.
And thats what the question is asking that how many units we will have at the end of the period 2.Thank so much HazE for answering this question in detail. I really appreciate it.
Now I understand how to solve this question. But still I couldn’t do it on my own without the answer. I’m very bad at budgeting.I’m so struggling now , struggling with a lot of questions in F2.
Next week I will need to take my first CBE exam. I’m pretty nervous because I know I’m not ready yet. But I have to do it as it’s already a due date for taking CBE exam. And I am pretty sure I will fail the exam. I don’t know what to do I feel like I’m messing up with my study. I’m so stressful. ;(Going into exam all stressed out is not going to help. Besides Budgeting is only one part of the syllabus and at the most you will get one comprehensive question along with one or two multiple choice questions on it. So there are still quite a lot of other areas where you can get marks. So going with the attitude that i am gonna fail it, is not gonna help. Just be positive and know that all you gotta do is get 50 percent. So back yourself and keep calm. Good luck and in the worst case it will be a learning experience. Good luck
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