Hoppe Inc.manufactures widgets.Management has determined that each widget has a standard materials cost of $3.50 when 2.5 grams of raw material at a cost of $1.40 per gram are used.The static budget for the month of December showed an estimated production of 4000 widgets in December.During December,4300 widgets were actually produced.The actual cost for each widget was $3.60 when 2.25 grams of raw material at a cost of $1.60 per gram were purchased and used.What should be the total direct materials cost according to Hoppe's flexible budget for December?
A) $14 400
B) $15 050
C) $14 000
D) $15 480

Question

Quizplus · Accepted Answer

The flexible budget takes into account the actual level of production, which was 4300 widgets instead of the estimated 4000 in the static budget. The flexible budget direct materials cost per widget can be calculated as follows:

Flexible budget direct materials cost per widget = ($1.60 per gram x 2.25 grams) = $3.60 per widget

Total direct materials cost in the flexible budget = (4300 widgets x $3.60 per widget) = $15,050

Therefore, the correct choice is B.

Hoppe IncManufactures Widgets