Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

Actual results for July:

-The direct materials in the flexible budget for July would be closest to:
A)$69,242
B)$69,490
C)$69,420
D)$69,134

Question

Coderre Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,800 units, but its actual level of activity was 7,780 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for July:

Data used in budgeting:

Actual results for July:

-The direct materials in the flexible budget for July would be closest to:

Data used in budgeting:

Actual results for July:

-The direct materials in the flexible budget for July would be closest to:
A)$69,242 
B)$69,490 
C)$69,420 
D)$69,134

Quizplus · Accepted Answer

The direct materials in the flexible budget for July would be closest to $69,242 because the flexible budget is based on the actual production level for July, which was 1,731 units. The direct materials cost per unit is $40, so the total direct materials cost for July would be 1,731 units x $40 = $69,240.

Coderre Corporation Manufactures and Sells a Single Product