Haft Construction Company Determines That 54000 Pounds of Direct Materials

question 92

Multiple Choice

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.

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Definitions:

Actual Fixed Overhead Costs

Actual fixed overhead costs are the incurred expenses that do not vary with the level of production or sales, such as rent and salary of permanent staff.

Budgeted Fixed Manufacturing Overhead

The estimated total fixed costs required for the manufacturing process, planned in advance for a specific period.

Materials Price Variance

The difference between the actual cost of materials used in production and the budgeted or standard cost, indicating how effectively a company controls its material costs.

Standard Costs

Predetermined costs for materials, labor, and overhead that are used for budgeting and cost control purposes.