Which of the Following Is Not a Step in Preparing

question 150

Multiple Choice

Which of the following is not a step in preparing the direct materials purchases budget?

• A)Enter the budgeted sales from the sales budget.
• B)Calculate the direct materials production needs by multiplying the number of units to be produced by the direct material standard quantity for one unit.
• C)Calculate the total direct materials required for the period by adding the ending inventory to the direct materials production needs.
• D)Calculate the required purchases by subtracting the beginning direct materials balance from the total direct materials required for the period.

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Definitions:

Break-Even

The point at which total costs and total revenues are equal, resulting in no net gain or loss.

Fixed Expense

Costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance premiums.

Variable Expense

Expenses that vary directly with changes in production volume or business activity levels.

Contribution Margin Ratio

A ratio that measures the proportion of sales revenue that exceeds variable costs, indicating how effectively a company can cover its fixed costs.