Principal Budget Factor – NBC Institute

IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

Question

a) Dampare Ltd manufactures three products namely A, B, and C. The information given below relates to the month of November 2020.

Product	Quantity (Units)	Price/Unit (GH¢)
Sales:
A	1,200	80
B	2,400	96
C	1,800	112

Materials used in company’s Products:

Material	MA	MB	MC
Unit cost	GH¢3	GH¢5	GH¢8

Quantity used in:	MA (Units)	MB (Units)	MC (Units)
Product A	5	3	1
Product B	4	4	3
Product C	3	2	2

Finished Stock:

Product A (Units)	Product B (Units)	Product C (Units)
Opening stock	1,200	1,800
Closing stock	1,320	1,980

Material Stock:

Material	MA (Units)	MB (Units)	MC (Units)
Opening stock	31,200	24,000	14,400
Closing stock	37,440	28,800	17,280

Required: Prepare the following functional budget for the month of November 2020 for: i) Sales in quantity and value, including total value ii) Production quantities iii) Material usage in quantities iv) Material purchases in quantities and value, including total value. (15 marks)

b) Principal budget factor is such an important factor in the budgetary control process. It is essential to identify the principal budget factor before the preparation of budgets.

Required: i) Explain the term “Principal budget factor” as used in budgetary control. (2 marks) ii) Identify THREE (3) examples of Principal budget factor from financial institution. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Material Purchases Budget, Material Usage Budget, Principal Budget Factor, Production Budget, Sales Budget
Level: Level 1

Topic: Budgeting
Series: APR 2022

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

Question

a) The following information has been extracted from the records of a company for the half-year ended 31 March 2021. A product, Capital Q, goes through two processes, X and Y:

Details relating to Process X for the period: Input units: 5,000 Finished units transferred to Process Y: 3,200 Closing WIP: 840 Normal losses: 10%

Normal losses have an estimated resale value of GH¢4 per unit.

Costs incurred during the period:

	GH¢
Direct materials	31,250
Direct labour	21,200
Overheads	17,325

Abnormal Losses and Closing WIP had the following degrees of completion at the end of the period:

	Direct materials	Direct labour	Overheads
Abnormal Losses	100%	80%	50%
Closing WIP	100%	80%	50%

Required: Using the weighted average method: i) Compute the cost per unit for each of the element of costs. (5 marks)

b) Compute the value of the complete units transferred to Process Y. (5 marks)

c) Compute the value of the closing WIP. (5 marks)

d) Prepare Process X Account for the period. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Abnormal Loss, Cost per Unit, Functional Budgets, Principal Budget Factor, Process Account
Level: Level 1

Topic: Budgeting, Process Costing
Series: APR 2022

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

Question

a) Budgeting has several objectives:
i) Planning;
ii) Control;
iii) Performance evaluation;
iv) Motivation.

Required:
Explain TWO (2) of the above objectives of budgeting and how the TWO (2) objectives explained could conflict with each other. (4 marks)

b) A company produces two products, A1 and A2, that are sold to retailers. The budgeted sales volumes for the products are as follows:

Product	Units
A1	32,000
A2	56,000

The inventory of finished goods is budgeted to increase by 1,000 units of A1 and decrease by 2,000 units of A2 by the end of the quarter.

Materials B3 and B4 are used in the production of both products.
The quantities required of each material to produce one unit of the finished product and the purchase prices are shown in the table below:

Material	B3	B4
A1	8kg	4kg
A2	4kg	3kg
Purchase price per kg	GH¢1.25	GH¢1.80
Budgeted opening inventory	30,000kg	20,000kg

The company plans to hold inventory of raw materials, at the end of the quarter, of 5% of the quarter’s material usage budget.

Required:
Prepare the following budgets for the quarter:
i) The production budget (in units) (2 marks)
ii) The material usage budget (in kg) (4 marks)
iii) The material purchases budget (in kg and GH¢) (6 marks)

c) Explain the term “Principal Budget Factor” as used in budgeting control and give TWO (2) examples from a financial institution. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting Objectives, Material Purchases, Material Usage, Principal Budget Factor, Production Budget
Level: Level 1

Topic: Budgeting
Series: MAY 2020

IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

Question

a) Dampare Ltd manufactures three products namely A, B, and C. The information given below relates to the month of November 2020.

Product	Quantity (Units)	Price/Unit (GH¢)
Sales:
A	1,200	80
B	2,400	96
C	1,800	112

Materials used in company’s Products:

Material	MA	MB	MC
Unit cost	GH¢3	GH¢5	GH¢8

Quantity used in:	MA (Units)	MB (Units)	MC (Units)
Product A	5	3	1
Product B	4	4	3
Product C	3	2	2

Finished Stock:

Product A (Units)	Product B (Units)	Product C (Units)
Opening stock	1,200	1,800
Closing stock	1,320	1,980

Material Stock:

Material	MA (Units)	MB (Units)	MC (Units)
Opening stock	31,200	24,000	14,400
Closing stock	37,440	28,800	17,280

b) Principal budget factor is such an important factor in the budgetary control process. It is essential to identify the principal budget factor before the preparation of budgets.

Required: i) Explain the term “Principal budget factor” as used in budgetary control. (2 marks) ii) Identify THREE (3) examples of Principal budget factor from financial institution. (3 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Material Purchases Budget, Material Usage Budget, Principal Budget Factor, Production Budget, Sales Budget
Level: Level 1

Topic: Budgeting
Series: APR 2022

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

Question

a) The following information has been extracted from the records of a company for the half-year ended 31 March 2021. A product, Capital Q, goes through two processes, X and Y:

Details relating to Process X for the period: Input units: 5,000 Finished units transferred to Process Y: 3,200 Closing WIP: 840 Normal losses: 10%

Normal losses have an estimated resale value of GH¢4 per unit.

Costs incurred during the period:

	GH¢
Direct materials	31,250
Direct labour	21,200
Overheads	17,325

Abnormal Losses and Closing WIP had the following degrees of completion at the end of the period:

	Direct materials	Direct labour	Overheads
Abnormal Losses	100%	80%	50%
Closing WIP	100%	80%	50%

Required: Using the weighted average method: i) Compute the cost per unit for each of the element of costs. (5 marks)

b) Compute the value of the complete units transferred to Process Y. (5 marks)

c) Compute the value of the closing WIP. (5 marks)

d) Prepare Process X Account for the period. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Abnormal Loss, Cost per Unit, Functional Budgets, Principal Budget Factor, Process Account
Level: Level 1

Topic: Budgeting, Process Costing
Series: APR 2022

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

Question

a) Budgeting has several objectives:
i) Planning;
ii) Control;
iii) Performance evaluation;
iv) Motivation.

Required:
Explain TWO (2) of the above objectives of budgeting and how the TWO (2) objectives explained could conflict with each other. (4 marks)

b) A company produces two products, A1 and A2, that are sold to retailers. The budgeted sales volumes for the products are as follows:

Product	Units
A1	32,000
A2	56,000

The inventory of finished goods is budgeted to increase by 1,000 units of A1 and decrease by 2,000 units of A2 by the end of the quarter.

Material	B3	B4
A1	8kg	4kg
A2	4kg	3kg
Purchase price per kg	GH¢1.25	GH¢1.80
Budgeted opening inventory	30,000kg	20,000kg

The company plans to hold inventory of raw materials, at the end of the quarter, of 5% of the quarter’s material usage budget.

c) Explain the term “Principal Budget Factor” as used in budgeting control and give TWO (2) examples from a financial institution. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Budgeting Objectives, Material Purchases, Material Usage, Principal Budget Factor, Production Budget
Level: Level 1

Topic: Budgeting
Series: MAY 2020

Question Tag: Principal Budget Factor

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IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

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IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

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IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

You're reporting an error for "IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing"

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

You're reporting an error for "IMAC – MAY 2020 – L1 – Q2 – Budgeting"

IMAC – April 2022 – L1 – Q2 – Budgeting

Preparation of functional budgets for Dampare Ltd and explanation of principal budget factor.

You're reporting an error for "IMAC – April 2022 – L1 – Q2 – Budgeting"

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

You're reporting an error for "IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing"

IMAC – MAY 2020 – L1 – Q2 – Budgeting

Explain objectives of budgeting, prepare production and material budgets, and describe principal budget factor.

You're reporting an error for "IMAC – MAY 2020 – L1 – Q2 – Budgeting"

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