ExpertACCA · Question 36 · D. Budgeting
SECTION B - MULTI-TASK QUESTION 1 (BUDGETING)
Scenario: AquaPure Desalination Plant is a public utility providing fresh water. The plant is preparing its budgets for Q3.
Data:
- Budgeted water sales: July 50,000 units; August 60,000 units; September 70,000 units.
- Inventory policy: Closing inventory of finished water must equal 10% of the next month's sales. (July opening inventory is exactly 5,000 units).
- Material requirements: Each unit of water requires 2 kg of chemical filter.
- Chemical filter cost: $3 per kg.
Based on the scenario, answer the following 5 sub-tasks. (Note: In a live exam, these would be separate input fields. For this practice, review the detailed solution).
Task 1: Calculate the budgeted production units for July.
Task 2: Calculate the budgeted production units for August.
Task 3: Calculate the total kg of chemical filter required for August production.
Task 4: If fixed costs are $100,000 and variable costs are $2 per unit, what is the flexed budget total cost for August's actual production if actual production was 62,000 units?
Task 5: Identify the budgeting approach where managers deliberately underestimate revenues or overestimate costs to make targets easier to achieve.
SECTION B - MULTI-TASK QUESTION 1 (BUDGETING)
Scenario: AquaPure Desalination Plant is a public utility providing fresh water. The plant is preparing its budgets for Q3.
Data:
- Budgeted water sales: July 50,000 units; August 60,000 units; September 70,000 units.
- Inventory policy: Closing inventory of finished water must equal 10% of the next month's sales. (July opening inventory is exactly 5,000 units).
- Material requirements: Each unit of water requires 2 kg of chemical filter.
- Chemical filter cost: $3 per kg.
Based on the scenario, answer the following 5 sub-tasks. (Note: In a live exam, these would be separate input fields. For this practice, review the detailed solution).
Task 1: Calculate the budgeted production units for July.
Task 2: Calculate the budgeted production units for August.
Task 3: Calculate the total kg of chemical filter required for August production.
Task 4: If fixed costs are $100,000 and variable costs are $2 per unit, what is the flexed budget total cost for August's actual production if actual production was 62,000 units?
Task 5: Identify the budgeting approach where managers deliberately underestimate revenues or overestimate costs to make targets easier to achieve.
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