Exhibit $10-2$

Benny's Bakery produces bagels for resale at local grocery stores. The master budget indicates that the company expects to use $2\mathrm{.}5$ pounds of direct materials for each unit produced at a cost of $$10\mathrm{.}00$ per pound $($one unit $=$ one batch of bagels$).$ Each unit produced will require $0\mathrm{.}30$ direct labor hours at a cost of $$24\mathrm{.}00$ per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $$4\mathrm{.}80$ per hour. Last year's sales were expected to total $40,000$ units. Benny just received last year's actual results showing sales of $35,000$ units.

Refer to Exhibit $10-2.$

What amount would the flexible budget show for direct materials?

None of the answer choices is correct.

$$875,000$

$$140,000$

$$1,000,000$

$$350,000$