COST ACCOUNTING
THE MASTER BUDGET
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Direct materials units required for production + Desired ending direct materials units-Beginning direct materials units = Required materials units to be purchased
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Direct materials units required for production + Desired ending direct materials units + Beginning direct materials units = Required materials units to be purchased
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Direct materials units required for production-Desired ending direct materials units-Beginning direct materials units = Required materials units to be purchased
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Direct materials units required for production-Desired ending direct materials units + Beginning direct materials units = Required materials units to be purchased
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Detailed explanation-1: -Understanding the Direct Materials Cost Formula The following formula can calculate the cost: Beginning Materials + Costs of Materials Purchased-Ending Materials = Direct Material Used.
Detailed explanation-2: -The formula for computation of the purchase is: Purchase in units = Usage + Desired ending material inventory units − Beginning inventory units. The direct material budget is usually accompanied by a computation of expected cash payments for materials. Given.
Detailed explanation-3: -The direct materials budget calculates the materials that must be purchased, by time period, in order to fulfill the requirements of the production budget. It is typically presented in either a monthly or quarterly format in the annual budget.
Detailed explanation-4: -desired ending finished goods units minus beginning finished goods units. The required production units are calculated by determining the estimated sales and the finished goods inventory in hand. The difference in the number of units is the required number of units to be produced.