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03-Purchase Budget

The document provides a manufacturing company's direct material usage and purchase budget for 2014. It gives the material requirements for Products A and B, projected production quantities, and opening and closing inventory levels for raw materials X and Y. The solution calculates the budgeted usage and purchase quantities for each material based on production needs and inventory changes over the year. It then determines the total budgeted purchase cost for materials X and Y.

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rikesh radhe
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209 views2 pages

03-Purchase Budget

The document provides a manufacturing company's direct material usage and purchase budget for 2014. It gives the material requirements for Products A and B, projected production quantities, and opening and closing inventory levels for raw materials X and Y. The solution calculates the budgeted usage and purchase quantities for each material based on production needs and inventory changes over the year. It then determines the total budgeted purchase cost for materials X and Y.

Uploaded by

rikesh radhe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Direct Material usage and Purchase Budget

Problem
A manufacturing compay provides you the following information
Particulars Product A Product B
Material X @ Rs. 3 per unit 2 units 4 units
Material Y @ Rs. 1 per unit 1 unit 2units
Units to be produced as per production budget 10,000 4,000

Inventory of Raw material :


Particulars Material X Material Y
Opening stock as on 01.01.2014 12,000 units 2,000 units
estimated closing stock as on 31.12.2014 16,000 units 4,000 units

prepare the Direct Material usage and purchase Budget for the year 2014

final product = Product A and Product B


input material = material X and material Y

Solution
Direct material usage and Purchase budget for the year 2014
Particulars Material X Material Y
A. Budgeted Usage ( for Production)
For Product A 10,000 units *2 = 20,000 units 10,000 units * 1 = 10,000 units
For Product B 4,000 units * 4 = 16,000 units 4,000 units * 2 = 8,000 units
36,000 units 18,000 units
Add: Closing stock 16,000 units 4,000 units
52,000 units 22,000 units
Less: Opening stock 12,000 units 2,000 units
Budgeted purchase (in units) 40,000 units 20,000 units
Rate per unit Rs. 3 Rs. 1
Budgeted purchase (in cost)
budgeted purchase in units * Rate per unit 40,000 units * Rs. 3 = Rs. 1,20,000 20,000 units *Re1 = Rs. 20,000

Budgted purchase = units required Budgted Production + closing stock of raw material - opening sock of raw material

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