Armstrong, Inc. uses a flexible budget. Armstrong produced 16,000 units in May incurring direct materials cost of $20,480. Its master budget for the year projected direct materials cost of $362,500, at a production volume of 290,000 units
A flexible budget for May should reflect direct materials cost of:
A. $20,480.
B. $20,000.
C. $21,000.
D. $19,750.
B
$362,500/290,000 = $1.25; $1.25 × 16,000 = $20,000
Business
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