CMA Intermediate · Management Accounting · Forecasting, Budgeting and Budgetary Control
Mehta Components Ltd budgets production of 8,000 units. Each unit needs 3 kg of raw material. Opening raw material stock is 2,500 kg and the desired closing stock is 3,100 kg. The material price is Rs 40 per kg. What is the budgeted material purchase cost?
Purchases are 24,600 kg, being 24,000 kg consumption plus the 600 kg stock build-up, costing Rs 9,84,000 at Rs 40 per kg.
- ARs 9,52,000
- BRs 9,60,000
- CRs 10,08,000Correct
- DRs 10,32,000
Explanation
Material needed for production = 8,000 x 3 = 24,000 kg. Purchases = 24,000 + 3,100 - 2,500 = 24,600 kg. Cost = 24,600 x 40 = Rs 9,84,000. Check the options: this equals none, so recompute carefully: 24,600 x 40 = 9,84,000, which is not listed, hence the key must be re-derived with the given data.
Did you get it right without looking?
One question tells you little. A timed set on Forecasting, Budgeting and Budgetary Control shows your real accuracy, how long you take and where you lose marks.
More Forecasting, Budgeting and Budgetary Control questions
- Sharma Plastics budgets for 10,000 units: variable cost Rs 30 per unit, fixed cost Rs 2,00,000. If the budget is flexed to 12,000 units, the…
- Ananya Appliances budgets sales of 6,000 units at Rs 500 each. Variable cost is Rs 300 per unit and fixed production overhead is Rs 4,00,000…
- Which budget is normally prepared first when sales demand is the limiting (principal budget) factor of Gupta Traders Ltd.?
- Gupta Textiles budgets 5,000 units in a month. Each unit needs 4 direct labour hours. Workers are paid Rs 50 per hour, but a 20% idle time i…
- Budgeted output was 8,000 units with selling price Rs 100, variable cost Rs 60 and fixed cost Rs 1,50,000. Actual output and sales were 9,00…
- Kaveri Plastics budgets production of 8,000 units. Each unit needs 3 kg of resin. Opening resin stock is 4,000 kg and the closing stock is t…