Question MA2.32: Data for questions 32 and 33 Sales of product G are budget...
Data for questions 32 and 33
Sales of product G are budgeted as follows.
| Month
1 |
Month 2 | Month 3 | Month 4 | Month 5 | |
| Budgeted sales units | 340 | 420 | 290 | 230 | 210 |
Company policy is to hold in inventory at the end of each month sufficient units of product G to satisfy budgeted sales demand for the forthcoming 2 months.
Question 32
The budgeted production of product G in month 2 is\boxed{ \ \ \ \ \ \ \ \ \ \ \ } units.
Question 33
Each unit of product G uses 2 litres of liquid K. Company policy is to hold in inventory at the end of each month sufficient liquid K for the production requirements of the forthcoming month. The budgeted purchases of liquid K in month 2 are \boxed{ \ \ \ \ \ \ \ \ \ \ \ } litres.
Solution 32
The budgeted production of product G in month 2 is 230 units.
Workings:
units
Closing inventory month 2 (290+ 230) 520
Month 2 sales requirements 420
940
Less opening inventory month 2 (420 + 290) (710)
Budgeted production month 2 230 (i.e. month 4 sales volume)
Solution 33
The budgeted purchases of liquid K in month 2 are 420 litres.
Workings:
Purchases each month will be the quantity required for production the following month. Production in month 3 = 210 units (month 5 sales), therefore, purchases in month 2 will be 210 × 2 litres = 420 litres