ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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raw materials needed to meet the production schedule + desired ending inventory of raw materials-beginning inventory of raw materials.
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raw materials needed to meet the production schedule-desired ending inventory of raw materials-beginning inventory of raw materials.
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raw materials needed to meet the production schedule-desired ending inventory of raw materials + beginning inventory of raw materials.
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raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials
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Detailed explanation-1: -When preparing a direct materials budget, beginning inventory for raw materials should be added to production needs, and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased.
Detailed explanation-2: -The direct materials purchases budget will show how many materials need to be purchased. The formula for this budget is as follows: Quantity of Direct Materials Needed for Production + Desired Ending Materials Balance-Beginning Materials = Direct Materials to be Purchased.
Detailed explanation-3: -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.
Detailed explanation-4: -Budgeted direct material purchases in units = Budgeted beginning direct material in units + Direct material in units necessary for production-Budgeted ending direct material in units.