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A company manufactures and sells one product which requires 8 kg of raw material in its manufacture. The budgeted data relating to the next period are as follows:
Units
Sales 19,000
Opening inventory of finished goods 4,000
Closing inventory of finished goods 3,000Kg
Opening inventory of raw materials 50,000
Closing inventory of raw materials 53,000What is the budgeted raw material purchases for next period (in kg)?
A. 141,000 B. 147,000 C. 157,000 D. 163,000
I need help answering this question. Any answers will be greatly appreciated. Thanks for your time and consideration.
B.
u will need to use 2 formulas.. and please remeber them by heart.
1. material purchases = material usage + closing bal – opening bal
2. units produced=units sold + closing bal – opening bal
using eqn. 2,
units produced = 19000+3000-4000=18000
this means we need to produce 18000 units next period
this means the material usage will be 18000 x 8 kg =144,000 kg
using eqn 1
material purchase=144,000+53000-50000=147000
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