Walton Company determines that 27,000 pounds of direct materials are needed for production in July. There are 1,600 pounds of direct materials on hand at July 1 and the desired ending inventory is 1,400 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?
A) 79,200.
B) 80,400.
C) 81,600.
D) 82,800.

Question

Quizplus · Accepted Answer

The budgeted total cost of direct materials purchases is calculated as follows: Required purchases = (Materials needed for production + Desired ending inventory - Beginning inventory) = (27,000 + 1,400 - 1,600) = 26,800 pounds. Total cost = 26,800 pounds * $3 = $80,400.

Walton Company Determines That 27,000 Pounds of Direct Materials Are