CMA Intermediate · Cost Accounting · Budget and Budgetary Control
Budgeted sales of Mehta Plastics for a month are 8,000 units. Each unit needs 3 kg of material costing ₹40 per kg. Opening stock of material is 3,000 kg, closing stock desired is 5,000 kg. Finished goods stock does not change. What is the material purchase budget in rupees?
The material purchase budget is ₹10,40,000. Production of 8,000 units needs 24,000 kg; adding closing stock of 5,000 kg and deducting opening stock of 3,000 kg gives 26,000 kg to purchase, which at ₹40 per kg costs ₹10,40,000.
- A₹9,20,000
- B₹9,60,000
- C₹10,40,000Correct
- D₹10,00,000
Explanation
Material needed = 8,000 x 3 = 24,000 kg. Purchases = 24,000 + 5,000 - 3,000 = 26,000 kg. Value = 26,000 x 40 = ₹10,40,000. ₹9,60,000 is the consumption value only, ignoring stock change.
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