Question

Marple Company's budgeted production in units and budgeted raw materials purchases over the next three months are given below: February January 60,000 March 100,000 Budgeted Production (in Units) Budgeted Raw Materials: Purchases (in Kilograms) 129,000 165,000 188,000 Two kilograms of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 36,000 kilograms of raw materials on hand on January 1. What should be the budgeted production for February?

Answer 1

production needs

	January	February	March
budgeted production	60000	75000	100000
Raw material per unit	2kg	2kgs	2kgs
Total Raw material required	120000	150000	200000
Add: Raw material required at the end	[2X*30%]	60000[200000*30%]
Less: Beginning inventory	36000	45000
Purchase	129000	165000	188000

120000+(2X*30%)-36000 = 129000

2X*30% - 36000=129000-120000

2X*30% =9000+36000

0.6X = 45000

X=75000

production is 75000 in February

2. flexible budget flexes according to actual machine hours however fixed cost remains constant

Variable costs	6240	[7800/15000 * 12000]
fixed cost	18000	remains constant irrespective of machine hours
Total flexible cost	D ANSWER

3.cash collection of December

	December
cash sale of december	30000	[120000*25%]
October receipts	18000	[160000*75%*15%]
November receipts	40500	[180000*75%*30%]
December receipts	45000	[120000*75%*50%]
Total cash collection in December	133500

4.

	april	may	june
sales	100000	120000	160000
Add: desired ending inventory	24000[120000*20%]	[X*20%]
Less: beginning invetory	20000	24000
production	104000	128000

120000 + .20X-24000 = 128000

X = 160000 units

5.FALSE

budget are used for both planning and control of operations.

Budget is a forecast of future events which helps in planning future as well as control the costs and revenues.