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Co makes a component M which uses 3 kg of raw mat. The open.inventory at the start of next year as follows:
Op invent of raw mat X 5000 kg @$4
Op invent of component M 3000 unitsBudgeted sales of component M are expected to be 48000 units (occurring evenly throughout the year)
Closing invent:
Raw mat X Ones month worth of production
Component M Two months worth of saleA. How many units of component M are to be produced in the year (I’ve already found 53000 units of M)
B. How many kg of mat X Are required for production in the year (also found 159000 kg)
C. What is material X purchases budget in $ I don’t know!
The answer 96000/12 + 159000 – 5000
I don’t understand why 96000?I think you must have got this from the BPP book, and their answer is wrong.
It should be (48000 x 3)/12
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