The Direct Materials Budget Shows How Much Are the Total Direct Materials Needed for Production

question 80

Multiple Choice

The direct materials budget shows: $\begin{array}{ll}\text { Desired ending direct materials } & 2,000 \text { kilograms } \\\text { Materials purchased } & 51,400 \text { kilograms } \\\text { Beginning inventory on hand } & 1,200 \text { kilograms }\end{array}$ How much are the total direct materials needed for production?

• A)50,600 kilograms
• B)52,600 kilograms
• C)52,200 kilograms
• D)51,400 kilograms

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Definitions:

Cost of Equity

The return rate that shareholders require to invest in a company's equity, taking into account the risk associated with the investment.

Cost of Debt

The effective rate that a company pays on its current debt, incorporating both interest payments and any other required repayments.

Cost of Equity

The return that investors require for their investment in shares, representing the compensation for taking on the risk of investing in equity.

M&M Proposition I

M&M Proposition I, under the Modigliani-Miller theorem, states that in an ideal market, the value of a firm is not affected by how it is financed, whether through debt or equity.