Production Estimates for August Are as Follows

question 44

Multiple Choice

Production estimates for August are as follows:

For each unit produced,the direct materials requirements are as follows:

The total direct materials purchases of materials A and B required for August production is

• A)$1,260,000 for A;$630,000 for B.
• B)$1,080,000 for A;$540,000 for B.
• C)$1,125,000 for A;$562,500 for B.
• D)$1,170,000 for A;$585,000 for B.

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Definitions:

Call

An option contract that gives the holder the right to purchase a stock, commodity, or other assets at a specified price within a specific time period.

Intrinsic Value

The fundamental value of a company, stock, currency, or product determined through financial analysis without reference to its market value.

March Put

An options contract giving the holder the right to sell an asset at a specified price before or on a March expiration date.

Underlying Stock

The basic security or asset upon which derivative contracts, such as options and futures, are based.