7) Preparing budgets

Question 1

Value purchases of material made in a period when given opening and closing inventory levels, and material usage during period - (Formula)

Answer 1

Purchases of material in period = Material used in period + Closing material inventory - Opening material inventory

Question 2

What type of budget provides a financial forecast that reflects not only an organisation’s most recent monthly results but also any material changes to its business outlook or the economy?

Answer 2

Rolling budgets - they are prepared regularly and represent the most up to date information.