US CMA Part 1 · Chapter 2 · Question 13 of 30
Production of 25,500 units is budgeted. Each unit requires 3 pounds of material costing $4 per pound. Materials inventory is expected to be 8,000 pounds at the beginning of the period, and the desired ending inventory is 9,500 pounds. What is the budgeted cost of materials purchases?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $312,000
Explanation
Materials needed for production = 25,500 x 3 = 76,500 lb. Purchases = 76,500 + 9,500 ending - 8,000 beginning = 78,000 lb. Cost = 78,000 x $4 = $312,000.
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