The Following Are Budgeted Data: One Pound of Material

question 5

Multiple Choice

The following are budgeted data: One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

• A)19,000 pounds
• B)19,200 pounds
• C)23,000 pounds
• D)18,800 pounds

---

Definitions:

Activity-based Costing

A method of allocating overhead and indirect costs to products or services based on the activities that generate those costs.

Overhead Costs

General business expenses that are not directly attributable to a specific product or service but are necessary for the business to operate.

Direct Labor-hours

The total hours worked by employees directly involved in the manufacturing process, used in assigning costs to products.

Activity-based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing more accurate product costing.