Which of the following statements is true regarding the budgeted cost for direct materials?
A) It would be used on a static budget but not a flexible budget.
B) It would consist of two components - a standard quantity and a standard price.
C) It must be determined after materials are purchased for the year.
D) It can not be determined if a company uses a just-in-time inventory system.

Question

Quizplus · Accepted Answer

The budgeted cost for direct materials consists of two components - a standard quantity and a standard price. This is used to determine the total cost of direct materials needed for production. Options A, C, and D are incorrect because the budgeted cost for direct materials is used on both static and flexible budgets, is determined before the start of the year, and is still relevant in a just-in-time inventory system.

Which of the Following Statements Is True Regarding the Budgeted