Kindly help with this question

For M, the opening inventory is 3,000, the sales are 48,000 and the closing inventory is 8,000 (2/12 x 48000). So the production will be 53,000 units. This means they will need 53000 x 3 = 159,000 kg of X for the production. For X, the opening inventory is 5,000, they need 159,000 for production. It is the closing inventory of X that is the problem and is where the question is very badly worded - it can be understood in two ways. One way is to do what you did - if they sell 48,000 then overall they need to produce 48,000 and so closing inventory of X is 1/12 x 48,000 x 3kg = 12,000 kg. This gives purchases of 166,000 kg. The other (maybe better) way is to say that if they are going to produce 53,000 units, the the closing inventory of X for one months production is 1/12 x 53,000 x 3kg = 13,250 kg. This gives purchases of 167,250 kg. I cannot see how your book gets 162,000!!! Do they not show any workings with their answer??

(96000/12)+159000-5000 = 162000 That's how they have worked it out

Well that makes no sense at all!!! I think they have made a mistake and that the correct answer is 166,000 :-)

Thanks :)

You are welcome :-)

A favourable fixed overhead capacity variance is likely to arise if a new machine is bought to replace an unreliable one. A true B false? Please help

It is true! It depends how they budgeted the hours available from the unreliable machine. If they took into account the unreliability in the budgets, then buying a new one will give more capacity and therefore a favourable capacity variance. They may not have done, but it is 'likely' and therefore the answer is 'true'.