Test: Final Exam Chapters (16-17, Time Limet: 02000 Suem Te 20-23, 25-26) This Q

Question

Test: Final Exam Chapters (16-17, Time Limet: 02000 Suem Te 20-23, 25-26) This Question: 1 pt 32 of 40 (17 complete) ? This Test: 40 pts possible g expects to produce 2,700 units in January and 3.200 units in February Beridze budgets $45 per unit for direct materials. The amount of indirect materials needed for production has been determined to be insignificant and will therefore not be considered in the calculation. The balance in January 1 is materials needed for production. Desired ending balance for February is $50,200. What is the cost of budgeted purchases of direct materials needed for January? the Raw Materials Inventory account (all direct materials) on 150 Bendze desires the ending balance in Raw Materials Inventory to be 50% of the next month's direct O A. $145,100 O B. $121,500 O C. $193,500 O D. $156,350

Explanation / Answer

The correct answer is option (D) i.e. $156,350 which is calculated as below:- Budgeted units to be produced in January            2,700 x Direct materials cost per unit                 45 Direct materials needed for production        121,500 Note 1 +Desired direct materials in ending inventory +          72,000 = Total direct materials needed        193,500 -Direct materials in beginning inventory          37,150 =Budgeted purchases of direct materials        156,350 Note 1 Desired direct materials in ending inventory = (3,200*45*50%) = 72,000

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