Soar, Inc. manufactures a product that has the direct materials standard cost presented below. Budgeted and actual information for the current month for the manufacture of the finished product and the purchase and use of the direct materials is also presented. Standard cost for direct materials: 1.60 lb. @ $2.50 per lb. Budget Actual Finished goods (in units) Direct materials usage (in pounds) Direct materials purchases (in pounds) 30,000 32,000 ? 51,000 48,000 50,000 Total cost of direct materials purchases ? $120,000
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![Soar, Inc. manufactures a product that has the direct materials standard cost presented below.
Budgeted and actual information for the current month for the manufacture of the finished product
and the purchase and use of the direct materials is also presented.
Standard cost for direct materials: 1.60 Ib. @ $2.50 per lb.
Budget
Actual
Finished goods (in units)
Direct materials usage (in pounds)
30,000
32,000
?
51,000
Direct materials purchases (in pounds)
48,000
50,000
Total cost of direct materials purchases
?
$120,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F07be42a1-4870-4a19-ae96-6457a6e512e1%2F0540c94a-5b91-42e6-ae4c-ae05df6803bd%2F9ovpf8d_processed.png&w=3840&q=75)
![Soar's direct materials usage/quantity variance for the current month is
A. $500 favorable.
B. $3,000 favorable.
C. $5,000 favorable.
D. $8,000 favorable.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F07be42a1-4870-4a19-ae96-6457a6e512e1%2F0540c94a-5b91-42e6-ae4c-ae05df6803bd%2F7914l5_processed.png&w=3840&q=75)
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