Flagstaff Company Has Budgeted Production Units of 7,900 for July

Multiple Choice

Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct materials requirement per unit is 2 ounces (oz.) . The company has determined that it wants to have safety stock of direct materials on hand at the end of each month to complete 20% of the units budgeted in the following month. There was 3,160 ounces of direct material in inventory at the start of July. The total cost of direct materials purchases for the July direct materials budget, assuming the materials cost $1.15 per ounce, is:

A) $18,262.
B) $21,896.
C) $14,536.
D) $18,078.
E) $18,170.