Production Estimates for August Are as Follows: for Each

question 179

Multiple Choice

Production estimates for August are as follows: For each unit produced, the direct materials requirements are as follows:
The number of pounds of materials A and B required for August production is:

• A) 216,000 lbs. of A; 72,000 lbs. of B
• B) 216,000 lbs. of A; 36,000 lbs. of B
• C) 225,000 lbs. of A; 37,500 lbs. of B
• D) 234,000 lbs. of A; 39,000 lbs. of B

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Definitions:

Outside Supplier

A third-party entity that provides goods or services to a business, typically not affiliated with the purchasing company.

Variable Costs

Costs that vary in total directly and proportionately with changes in the level of production or activity volume.

Transfer Price

The charge for products and services transferred between branches of the same company.

Idle Capacity

The portion of a company's production capacity that remains unutilized or is not in active production due to lack of demand, maintenance, or other reasons.