Colorado Springs Ltd.produces and sells bottled water.The company's controller has the following information available from the static budget of one of the product lines for the month of April:
$\begin{array}{lr}
\text { Estimated production } & 20000 \text { units } \
\text { Direct material per unit } & 2 \text { ounces } \
\text { Direct material cost per unit } & \$ .15 \text { per ounce }
\end{array}$

Actual production during April was 18 000 units and actual direct materials cost was $6300.
If the company prepares a flexible budget for April,direct materials cost is estimated to be:

Question

Colorado Springs Ltd.produces and sells bottled water.The company's controller has the following information available from the static budget of one of the product lines for the month of April:
$\begin{array}{lr}
\text { Estimated production } & 20000 \text { units } \
\text { Direct material per unit } & 2 \text { ounces } \
\text { Direct material cost per unit } & \$ .15 \text { per ounce }
\end{array}$

Actual production during April was 18 000 units and actual direct materials cost was $6300.
If the company prepares a flexible budget for April,direct materials cost is estimated to be:

Quizplus · Accepted Answer

A flexible budget adjusts costs based on actual production levels. Here, for 18,000 units, the direct materials cost is calculated as follows: 18,000 units * 2 ounces/unit * $0.15/ounce = $5,400.

Colorado Springs Ltd Actual Production During April Was 18 000 Units and Actual