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CIMA Exam CIMAPRA17-BA2-1 Topic 1 Question 76 Discussion

Actual exam question for CIMA's CIMAPRA17-BA2-1 exam
Question #: 76
Topic #: 1
[All CIMAPRA17-BA2-1 Questions]

A company's policy is to hold closing inventory each month equal to 10% of the next month's budgeted sales volume. The budgeted sales volumes of product Q for months 1 and 2 are 1,660 units and 2,300 units respectively.

The production budget for product Q for month 1 is:

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Suggested Answer: B

by Vinnie at Jul 18, 2024, 05:29 AM

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Genevive
4 months ago
Haha, I bet the exam writers thought they were being sneaky with this one. But you guys have it figured out. This is like basic inventory management 101.
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Karrie
4 months ago
Ah, I see! That makes sense. The production budget for month 1 needs to account for the sales volume and the closing inventory for the next month. Good catch, Santos!
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Santos
4 months ago
Wait, isn't the production budget for month 1 the sum of the sales volume for month 1 and the closing inventory for month 2? So the answer should be option C, 1,724 units.
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Bettina
3 months ago
That makes sense, thanks for clarifying!
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Ben
3 months ago
So, the answer would be option C, 1,724 units.
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Ling
3 months ago
I think you're right, the production budget for month 1 should include the sales volume for month 1 and the closing inventory for month 2.
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Von
4 months ago
Okay, let's think this through. For month 1, the sales volume is 1,660 units, so the closing inventory should be 10% of that, which is 166 units. For month 2, the sales volume is 2,300 units, so the closing inventory should be 230 units.
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Chantell
3 months ago
D) 1,890 units
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Rosina
3 months ago
C) 1,724 units
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Laticia
3 months ago
B) 1,494 units
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Margurite
3 months ago
A) 1,596 units
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Giovanna
4 months ago
I disagree with Eveline, because if the closing inventory for month 1 is 2,070 units, then the production budget for month 1 should be 1,660 + 2,070 = 3,730 units.
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Eveline
5 months ago
I'm not sure, but I think the answer might be C) 1,724 units.
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Aide
5 months ago
I agree with Denise, because 10% of 2,300 is 230, so the closing inventory for month 1 would be 2,300 - 230 = 2,070 units.
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Sharee
5 months ago
Hmm, this seems straightforward. The policy states that the closing inventory should be 10% of the next month's sales, so we just need to calculate that for each month.
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Allene
4 months ago
B) 1,494 units
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Dusti
5 months ago
A) 1,596 units
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Denise
5 months ago
I think the answer is A) 1,596 units.
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