Laramie, Inc $\text { Laramie had the following budgeted data }$

question 158

Multiple Choice

Laramie, Inc., has an operating environment with considerable uncertainty. The company prepares the budget for several different volume levels. $\text { Laramie had the following budgeted data }$
$\begin{array}{lr}\text { Budgeted variable costs per unit: } & \\\text { Direct materials } & \$ 7.00 \\\text { Direct labor } & 10.00 \\\text { Supplies } & 1.00 \\\text { Indirect labor } & 0.50 \\\text { Power } & 0.05\\\\\text { Budgeted fixed overhead for } 2018 \text { : }\\\text { Supervision } & \$ 4,000 \\\text { Depreciation } & 3,000 \\\text { Rent } & 2,000\end{array}$ What are the budgeted costs for materials if 5,000 units were produced?

• A)$9,000
• B)$4,000
• C)$50,000
• D)$35,000

---

Definitions:

Batch

A set of goods or materials processed or produced at the same time, often used in the context of batch processing.

Split-Off Point

That point in the manufacturing process where some or all of the joint products can be recognized as individual products.

Sales Value

The total revenue attained from goods or services sold, calculated by multiplying the selling price by the number of units sold.

Absorption Costing

A costing method where all manufacturing costs, both fixed and variable, are allocated to products, thus "absorbing" them into the cost of goods sold.