Cape Corporation Sells a Single Product ? the Amount of Direct Material a Purchased During the Are

question 98

Multiple Choice

Cape Corporation sells a single product.Budgeted sales for the year are anticipated to be 640,000 units, estimated beginning inventory is 98,000 units, and desired ending inventory is 80,000 units.The quantities of direct materials expected to be used for each unit of finished product are given below. $\begin{array}{lll}\text { Material A } & .50 \mathrm{lb} \text { per unit } & @ \$ 0.60 \text { per pound } \\\text { Material B } & 1.00 \mathrm{lb} \text { per unit } & @ \$ 1.70 \text { per pound } \\\text { Material C } & 1.20 \mathrm{lb} \text { per unit } & @ \$ 1.00 \text { per pound }\end{array}$ ? The amount of direct material A purchased during the year is:

• A) $216,000.
• B) $186,600.
• C) $192,000.
• D) $245,400.

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Definitions:

Rights Offering

A mechanism in finance, particularly in stock markets, where companies offer existing shareholders the right to buy additional shares at a discounted price before selling them to the public.

Subscription Price

The cost at which existing shareholders can purchase additional shares of stock in a company before it is offered to the public.

Market Price

The cost at which the marketplace is currently trading assets or services.

Underwriting Spread

Underwriting spread is the difference between the price at which underwriters buy an issue from the issuer and the price at which they sell it to the public.