When calculating raw materials purchases, the starting point should be:

Question

Quizplus · Accepted Answer

The starting point for calculating raw materials purchases should be the budgeted production. This is because the amount of raw materials needed will be determined by the amount of goods that need to be produced. Budgeted sales may give an idea of how much goods will be sold, but it doesn't take into account any inventory buildup or changes in production efficiency. Actual materials purchases from the previous year may not be relevant if there have been changes in production processes or product mix. Budgeted cost of raw materials can be used in conjunction with budgeted production to calculate total materials purchases, but it is not the starting point.

When Calculating Raw Materials Purchases, the Starting Point Should Be