Chaitanya, the purchasing manager of direct materials at AirFun, was reviewing the budgeted balance sheet for the upcoming year. She noticed that the accounts payable account for direct materials had increased significantly. She needs to understand what caused the increase. She should find the cause of the increase _____ and could get an explanation from _______.
A) on the budgeted balance sheet under Direct Material Inventory balance, the CFO about the reason for the increase
B) on the budgeted cash flow statement under the Operating Activities section, the plant manager about the reason for the increase
C) on the budgeted income statement under Sales, the VP of Sales about the reason for the increase
D) on the Direct Materials Purchases budget, the plant manager about the reason for the increase

Question

Quizplus · Accepted Answer

Once the production budget has been set, it is used to determine the direct materials purchases. An increase in raw materials purchases on credit and/or an increase in the materials costs would increase the accounts payable account for direct materials.

Chaitanya, the Purchasing Manager of Direct Materials at AirFun, Was