### Budgeting for Direct Material Costs**Scenario:**Coronado Industries determines that 63,000 pounds of direct materials are needed for production in July. There are 4,200 pounds of direct materials on hand at July 1, and the desired ending inventory is 3,600 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases?**Options:**1. $183,6002. $190,8003. $187,2004. $194,400### Solution:1. **Calculate Total Direct Materials Required for Production:** - Direct Materials Required: 63,000 pounds2. **Add Desired Ending Inventory:** - Desired Ending Inventory: 3,600 pounds - Total Needed: 63,000 pounds + 3,600 pounds = 66,600 pounds3. **Subtract Beginning Inventory:** - Beginning Inventory: 4,200 pounds - Direct Materials to be Purchased: 66,600 pounds - 4,200 pounds = 62,400 pounds4. **Calculate Total Cost:** - Cost per Unit of Direct Materials: $3 - Total Cost: 62,400 pounds * $3 = $187,200**Therefore, the budgeted total cost of direct materials purchases is $187,200.**

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A budget is defined as the estimation or forecast of the expenses incurred and revenue earned for a…

Business

Accounting

nes the has of Tais ar Coronado Industries det uly. There are 4200 pounds direct materials on hand at July 1 and the desired ending inventory is 3600 pounds. If the cost per unit of direct materials is $3, wh the budgeted total cost of direct materials purchases? O 183600. O 190800. O 187200. O 194400.

nes the has of Tais ar Coronado Industries det uly. There are 4200 pounds direct materials on hand at July 1 and the desired ending inventory is 3600 pounds. If the cost per unit of direct materials is $3, wh the budgeted total cost of direct materials purchases? O 183600. O 190800. O 187200. O 194400.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 11E

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