Haft Construction Company determines that 54000 pounds of direct materials are needed for production in July. There are 3200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2800 pounds. If the cost per unit of direct materials is $3 what is the budgeted total cost of direct materials purchases?

A) 158400.
B) 160800.
C) 163200.
D) 165600.

Question

Zybrea Knight · Accepted Answer

Final Answer : B, Explanation :  The total amount of direct materials needed for production and desired ending inventory is 54,000 + 2,800 = 56,800 pounds. Subtracting the beginning inventory of 3,200 pounds, the company needs to purchase 56,800 - 3,200 = 53,600 pounds of direct materials. At a cost of $3 per pound, the total cost is 53,600 * $3 = $160,800.

Definitions

Learning Objectives

Learning Objectives

Related questions