Question
1. Aircraft Products, a manufacturer of aircraft landing gear, makes 2,900 units each year of a special valve used in assembling one of its products.
1. Aircraft Products, a manufacturer of aircraft landing gear, makes 2,900 units each year of a special valve used in assembling one of its products. The unit cost of producing this valve includes variable costs of $61 and fixed costs of $65. The valves could be purchased from an outside supplier at $68 each. If the valve were purchased from the outside supplier, 40% of the total fixed costs incurred in producing this valve could be eliminated. Buying the valves from the outside supplier instead of making them would cause the company's operating income to:
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Increase by $92,800.
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Decrease by $92,800.
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Increase by $55,100.
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Decrease by $55,100.
2. Ross Corporation makes all sales on account. The June 30th balance sheet balance in its accounts receivable is $330,000, of which $205,000 pertain to sales that were made during June. Budgeted sales for July are $1,180,000. Ross collects 75% of sales in the month of sale; 10% in the following month; and the final 15% in the second month after the sale.
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$1,090,000
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$1,030,500
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$418,000
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$924,250
3. On October 1 of the current year, Molloy Corporation prepared a cash budget for October, November, and December. All of Molloy's sales are made on account. The following information was used in preparing estimated cash collections:
August sales (actual) | $ 31,000 |
September sales (actual) | $ 41,000 |
October sales (estimated) | $ 28,000 |
November sales (estimated) | $ 61,000 |
December sales (estimated) | $ 51,000 |
Approximately 65% of all sales are collected in the month of the sale, 20% is collected in the following month, and 15% is collected in the month thereafter. |
Budgeted collections from customers in October total:
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$100,000.
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$40,850.
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$31,050.
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$26,400.
4a. The following information is from the manufacturing budget and budgeted financial statements of Altman Corp.:
Direct materials inventory, 1/1 | $ 82,000 |
Direct materials inventory, 12/31 | $ 98,000 |
Direct materials budgeted for use during year | $ 340,000 |
Accounts payable to suppliers, 1/1 | $ 50,000 |
Accounts payable to suppliers, 12/31 | $ 60,000 |
For the year, budgeted purchases of direct materials amounted to:
Multiple Choice
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$346,000.
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$324,000.
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$356,000.
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$366,000.
4b. For the year, budgeted cash payments to suppliers amounted to:
Multiple Choice
-
$356,000.
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$346,000.
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$366,000.
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$324,000.
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