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ACCA Paper F2 Course Notes null
Budgeted Sales 18,000 units
Open Inventories 15,000 Units
Closing Inventories 11,400 Units
10% of inventories are scrapped as defective, what is Budgeted Production.i am OK with the question till i get to the 10% defective inventories, the answer to this question shows (10% of Output = 1/9 of Input). Don’t understand could someone explain
Are you sure you are typing the question and answer correctly?
If 10% of the output is defective, then the input is 10/9 x output.
Here you are budgeting on selling 18,000 units so you must have budgeted on having 10/9 x 18000 = 20000 units before defectives. 20000 x 10% – 2000 defective which leave you with 20000 – 2000 = 18000 available for sale.
(You still obviously need to adjust for opening/closing inventories)
Hello, I can’t seem to get this right. Please help.
What i have done is, multiply 2.5hr by 8000units = 20,000
I then divided 88,000/20,000 = 4.4
I multiplied 4.4 by 2.5 = 11
The correct answer according to the notes is D=13.
What am I doing wrong please.
Original question below.A company manufactures two products P1 and P2 in a factory divided into two cost centres, X and Y. The following budgeted data are available:
Allocated and apportioned fixed overhead costs Direct labour hours per unit: Product P1
Product P2
Cost centre XY
£88,000 £96,000
3·0 1·0 2·5 2·0
Budgeted output is 8,000 units of each product. Fixed overhead costs are absorbed on a direct labour hour basis.
What is the budgeted fixed overhead cost per unit for Product P2?
A £10 C £12 B £11 D £13
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