Asked by Monica De Leon on Apr 29, 2024
Verified
Haft Construction Company determines that 54000 pounds of direct materials are needed for production in July. There are 3200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2800 pounds. If the cost per unit of direct materials is $3 what is the budgeted total cost of direct materials purchases?
A) 158400.
B) 160800.
C) 163200.
D) 165600.
Direct Materials
Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.
Production Budget
A financial plan that outlines the expected production levels of a company based on projected sales, inventory policies, and capacity constraints.
- Evaluate and determine the budget allocations for purchasing and paying for direct materials.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
B
Explanation :
The total amount of direct materials needed for production and desired ending inventory is 54,000 + 2,800 = 56,800 pounds. Subtracting the beginning inventory of 3,200 pounds, the company needs to purchase 56,800 - 3,200 = 53,600 pounds of direct materials. At a cost of $3 per pound, the total cost is 53,600 * $3 = $160,800.
Learning Objectives
- Evaluate and determine the budget allocations for purchasing and paying for direct materials.
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