ACCA MA · Chapter 10 · Question 3 of 11
Production for a period is budgeted at 12,500 units. Each unit uses 3 kg of material costing $2 per kg. Opening raw material inventory is 4,000 kg and closing inventory is budgeted at 5,000 kg. What is the material purchases budget in $?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $77,000
Explanation
Material needed for production = 12,500 x 3 = 37,500 kg. Purchases = usage + closing inventory - opening inventory = 37,500 + 5,000 - 4,000 = 38,500 kg. Cost = 38,500 x $2 = $77,000.
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