Letts Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During January, the company budgeted for 7, 000 units, but its actual level of activity was 6, 970 units.The company has provided the following data concerning the formulas to be used in its budgeting: The direct materials in the flexible budget for January would be closest to:
A)$61, 564
B)$62, 095
C)$60, 900
D)$60, 639

Question

Letts Corporation manufactures and sells a single product.The company uses units as the measure of activity in its budgets and performance reports.During January, the company budgeted for 7, 000 units, but its actual level of activity was 6, 970 units.The company has provided the following data concerning the formulas to be used in its budgeting:  The direct materials in the flexible budget for January would be closest to:
A)$61, 564 
B)$62, 095 
C)$60, 900 
D)$60, 639

Quizplus · Accepted Answer

Cost = Fixed cost + (Variable cost per unit × q)
= $0 + ($8.70 × 6, 970)= $60, 639

Letts Corporation Manufactures and Sells a Single Product