Baugus Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 6,900 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August:
-The direct materials in the flexible budget for August would be closest to:
A) $127,650
B) $128,575
C) $127,581
D) $129,436

Question

Baugus Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 6,900 units, but its actual level of activity was 6,950 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: 
-The direct materials in the flexible budget for August would be closest to:
A) $127,650 
B) $128,575 
C) $127,581 
D) $129,436

Quizplus · Accepted Answer

The flexible budget for direct materials is calculated based on the actual level of activity. Without specific details on the activity level or cost per unit, the closest estimate provided is $128,575.

Baugus Corporation Manufactures and Sells a Single Product