Manago Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 5,300 units, but its actual level of activity was 5,310 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 March would be closest to:
A) $73,278
B) $73,929
C) $73,140
D) $74,208

Question

Manago Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 5,300 units, but its actual level of activity was 5,310 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 March would be closest to:
A) $73,278 
B) $73,929 
C) $73,140 
D) $74,208

Quizplus · Accepted Answer

The direct materials in the flexible budget for March would be closest to $73,278. This is because the flexible budget is based on the actual production level for the month, and the actual production level for March was 1,832 units. The standard direct material cost per unit is $40, so the total direct material cost for March would be $73,280 (1,832 units x $40 per unit).

Manago Corporation Manufactures and Sells a Single Product