A company plans to produce 50,000 units during the budget period. To produce 1 unit of finished goods, the company requires 5 units of raw material,…

CA Intermediate · Cost and Management Accounting · MTP · September 2025
A company plans to produce 50,000 units during the budget period. To produce 1 unit of finished goods, the company requires 5 units of raw material, including an allowance for 5% raw material wastage during production. The company currently has 90,000 units of raw material in stock and wishes to maintain an ending inventory of 1,20,000 units of raw material at the end of the budget period. How many units of raw material should the company plan to purchase during the budget period?
(A) 3,45,000 units
(B) 3,50,000 units
(C) 2,80,000 units
(D) 3,70,000 units

Suggested Answer and Working Notes:

Correct Answer: Option (C)

2,80,000 units

Topics: Budgets and Budgetary Control

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic