Asked by Mariah Donnally on Jun 15, 2024
Verified
When preparing a direct materials budget, the required purchases of raw materials in units equals:
A) raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials.
B) raw materials needed to meet the production schedule − desired ending inventory of raw materials − beginning inventory of raw materials.
C) raw materials needed to meet the production schedule − desired ending inventory of raw materials + beginning inventory of raw materials.
D) raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials.
Direct Materials Budget
A financial plan that estimates the quantity and cost of direct materials required for production during a specific period.
Raw Materials
Any materials that go into the final product.
Production Schedule
A timeline that outlines the specific tasks, operations, and timelines for producing goods within a manufacturing process.
- Digest the principals and configurations of various budgeting strategies, including sales, manufacturing overhead, cash, direct materials, and production budgets.
- Calculate direct labor costs and raw material purchases as part of the budgeting process.
Verified Answer
TQ
taylor quickJun 16, 2024
Final Answer :
A
Explanation :
The correct formula for calculating the required purchases of raw materials in units is: raw materials needed to meet the production schedule + desired ending inventory of raw materials − beginning inventory of raw materials. This accounts for the total materials needed for production, ensures there is enough material for the desired ending inventory, and adjusts for what is already available at the beginning.
Learning Objectives
- Digest the principals and configurations of various budgeting strategies, including sales, manufacturing overhead, cash, direct materials, and production budgets.
- Calculate direct labor costs and raw material purchases as part of the budgeting process.
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