The question of raw material in the purchases budget may be higher than the quantity of...
The question of raw material in the purchases budget may be higher than the quantity of raw material in the production budget because:
Group of answer choices
The company obtains discount for bulk purchases
units sold will be higher than units sold
Raw material prices are falling
Stock level are being reduced
Homework Answers
Raw material in the purchases budget may be higher than the quantity of raw material in the production budget because:
Answer:
- The company of obtains discount for bulk purchases.
- Raw material prices are falling.
Explanation :
The only reason behind the raw material in the purchases budget may be higher than the quantity of raw material in the production budget is that the company obtains discount for bulk purchase and raw material prices are falling.
This is so because purchase budgets are made keeping the future market trends into consideration and more raw material in the purchase budget than the raw material in the production budget cannot be done only because the stock levels are being reduced or because units purchased are higher than units sold.
So the correct group of answers are :-
- The company of obtains discount for bulk purchase.
- Raw material prices are falling.
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