If There Were 60000 Pounds of Raw Materials on Hand

question 148

Multiple Choice

If there were 60000 pounds of raw materials on hand on January 1 120000 pounds are desired for inventory at January 31 and 410000 pounds are required for January production how many pounds of raw materials should be purchased in January?

• A) 350000 pounds
• B) 530000 pounds
• C) 290000 pounds
• D) 470000 pounds

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Definitions:

Variable Cost

Expenses that change directly in relation to fluctuations in production levels or the volume of sales.

Fixed Cost

Expenses that do not change with the level of goods or services produced by the business over a given period.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.

Variable Cost

Outlays that move in tandem with the level of production or the scale of sales.