Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.What would Delaware's direct materials cost be if it used a flexible budget for the period based on actual sales?
A)$19,870
B)$21,360
C)$22,962
D)$91,848

Question

Quizplus · Accepted Answer

To calculate the direct materials cost using a flexible budget, we need to first calculate the standard cost per unit.
Direct Materials = $21,360
Actual units sold = 4,300
Standard materials cost per unit = Direct materials / Actual units sold = $21,360 / 4,300 = $4.96
Flexible budget direct materials cost = Standard materials cost per unit x Budgeted sales = $4.96 x 4,300 = $21,308
Therefore, the closest option is C, $22,962. However, we need to subtract the difference between actual and budgeted units sold from the flexible budget direct materials cost.
Difference = Actual units sold - Budgeted units sold = 4,300 - 4,000 = 300
Flexible budget direct materials cost - (Standard materials cost per unit x Difference) = $21,308 - ($4.96 x 300) = $19,868
Hence, the best choice is C, $22,962.