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Product Units: Source: Drury Chapter 15

The document provides budgeting information for a company that produces two products, A1 and A2, including: - Budgeted sales volumes of 32,000 units of A1 and 56,000 units of A2 - Budgeted changes in finished goods inventory of +1,000 units of A1 and -2,000 units of A2 - Materials (B3 and B4) used in each product and their purchase prices - Budgeted opening inventory amounts of materials - The company plans to hold a 5% inventory of raw materials usage at the end of the quarter The required budgets to be prepared are: production budget in units, material usage budget in kg, and material purchases budget in kg

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53 views1 page

Product Units: Source: Drury Chapter 15

The document provides budgeting information for a company that produces two products, A1 and A2, including: - Budgeted sales volumes of 32,000 units of A1 and 56,000 units of A2 - Budgeted changes in finished goods inventory of +1,000 units of A1 and -2,000 units of A2 - Materials (B3 and B4) used in each product and their purchase prices - Budgeted opening inventory amounts of materials - The company plans to hold a 5% inventory of raw materials usage at the end of the quarter The required budgets to be prepared are: production budget in units, material usage budget in kg, and material purchases budget in kg

Uploaded by

rahim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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| BUS 239 | Week |

Budgeting | Chapter 15 | Chandres Tejura

Seminar Question

A company produces two products, A1 and A2 that are sold to retailers. The
budgeted sales volumes for the next quarter are as follows:

Product Units
A1 32 000
A2 56 000
The inventory of finished goods is budgeted to increase by 1000 units of A1
and decrease by 2000 units of A2 by the end of the quarter.

Materials B3 and B4 are used in the production of both products. The


quantities required of each material to produce one unit of the finished
product and the purchase prices are shown in the table below:

  B3 B4
A1 8 kg 4 kg
A2 4 kg 3 kg
Purchase price per kg $1.25 $1.80
Budgeted opening inventory 30,000 kg 20,000 kg
The company plans to hold inventory of raw materials, at the end of the
quarter, of 5 per cent of the quarter’s material usage budget.

Required:

Prepare the following budgets for the quarter:

 (i)
The production budget (in units)
 (ii)
The material usage budget (in kg)
 (iii)
The material purchases budget (in kg and $) (5 marks)
Source: Drury Chapter 15

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