Operating Budgets

Question 1

Closing inventory formula

Answer 1

Total cost of production / production units X Closing inventory of finished goods

Question 2

Cost of goods sold formula

Answer 2

Opening inventory
+ total cost of production
- closing inventory

Question 3

Materials payable (extended q - cash flow)

Answer 3

Purchase £ NOT used in production £

Question 4

First and alternative scenarios -
Energy is £123600 first scenario
A previous allowance of 3% price increase
Energy price decreases by 1% in alternative scenario

What’s the calculation and answer?

Answer 4

123600 / 103% X 100 = £120000 (price before the 3% price increase)

£120000 X 99% / 100 = £118800