ExpertMedium2 marksShort Answer
ACCA · Question 23 · Syllabus D: Budgeting
A 3D printing firm plans to produce 4,000 custom prototypes next month. Each prototype requires 0.5 kg of specialized resin.
The firm wants to increase its resin inventory. Opening inventory is 300 kg, and the target closing inventory is 800 kg.
Calculate the total kg of resin that needs to be PURCHASED next month. (Enter number only, no commas or symbols)
A 3D printing firm plans to produce 4,000 custom prototypes next month. Each prototype requires 0.5 kg of specialized resin.
The firm wants to increase its resin inventory. Opening inventory is 300 kg, and the target closing inventory is 800 kg.
Calculate the total kg of resin that needs to be PURCHASED next month. (Enter number only, no commas or symbols)
How to approach this question
1. Calculate material required for production (units * kg/unit). 2. Add target closing inventory. 3. Subtract opening inventory.
Full Answer
1. Material required for production (Usage) = 4,000 units × 0.5 kg = 2,000 kg.
2. Material Purchases Budget = Usage + Closing Inventory - Opening Inventory
3. Purchases = 2,000 kg + 800 kg - 300 kg = 2,500 kg.
Common mistakes
Forgetting to multiply the 4,000 units by 0.5 kg, or subtracting closing inventory instead of adding it.
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