The Direct-Material Budget Shows the Number of Units and the Cost

question 37

Multiple Choice

The direct-material budget shows the number of units and the cost of material to be purchased and used during a budget period. Which of the following formulas is this schedule based on?

• A) Raw materials required for production + desired ending inventory of raw material = Total raw material required - expected beginning inventory of raw material = Raw material to be purchased.
• B) Raw materials required for production - desired ending inventory of raw material = Total raw material required + expected beginning inventory of raw material = Raw material to be purchased.
• C) Total raw material required + Raw materials required for production = desired ending inventory of raw material = Raw material to be purchased.
• D) Raw material to be purchased + expected beginning inventory of raw material = Desired ending inventory of raw material x cost per unit = Raw materials required for production.
• E) Raw material required for production ÷ [(expected beginning inventory of raw material + desired ending inventory of raw material) /2] = Raw material to be purchased.

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Definitions:

Standard Error

A statistical measure that indicates the accuracy with which a sample distribution represents a population by measuring the dispersion of sample means around the population mean.

Coefficient Of Determination

A statistic that quantifies the proportion of the variance in the dependent variable that is predictable from the independent variable(s), often symbolized as R^2.

Test Statistic

A statistic derived from the data of a sample during a hypothesis test that determines if the null hypothesis should be discarded.

Value Of F

In the context of statistical testing, it refers to the calculated statistic used in the F-test to determine whether two population variances are equal.