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1) ARO Inc. sold 10,000 units during its second month of operations at an average selling price of $8 per unit. Its Accounts Receivable balance

1) ARO Inc. sold 10,000 units during its second month of operations at an average selling price of $8 per unit. Its Accounts Receivable balance at the start of the second month was $50,000. ARO collects all sales evenly over a two month period. What were ARO's collections during its second month of operations?

Multiple Choice

  • $135,000

  • $90,000

  • $80,000

  • $50,000

2) XYZ Inc. sells a single product for a budgeted selling price of $22 per unit. Budgeted direct materials costs were $5 per unit, while budgeted direct labour and variable overhead costs were $3 and $2 respectively. Budgeted fixed overhead costs amount $25,000 per month. The company has a practical production capacity of 10,000 units per month. Budgeted variable selling costs are $2 per unit. Budgeted fixed selling costs are $2,000 per month. During the company's first month of operations, the company produced 10,000 units and sold 9,500 units at an average selling price of $18 per unit. Fixed and variable costs were as budgeted. The company's static budget variance was:

Multiple Choice

  • $43,000 unfavourable

  • $23,000 favourable

  • $44,000 unfavourable

  • $44,000 favourable

3)

XLM Inc. sells a single product for a budgeted selling price of $21 per unit. Budgeted direct materials costs were $5 per unit, while budgeted direct labour and variable overhead costs were $3 and $2 respectively. Budgeted fixed overhead costs amount $25,000 per month. The company has a practical production capacity of 10,000 units per month. Budgeted variable selling costs are $2 per unit. Budgeted fixed selling costs are $2,000 per month. During the company's first month of operations, the company produced 10,000 units and sold 7,500 units at an average selling price of $18 per unit. Fixed and variable costs were as budgeted. The company's static budget variance was:

Multiple Choice

  • $35,000 favourable.

  • $45,000 unfavourable.

  • $44,000 unfavourable.

  • $44,000 favourable.

4)

ARO Inc. sold 10,000 units during its second month of operations at an average selling price of $8 per unit. Its Accounts Receivable balance at the start of the second month was $50,000. ARO collects all sales as follows: 40% during the month of the sale and 60% in the month following the sale. What was ARO's Accounts Receivable at the end of its second month of operations?

Multiple Choice

  • $98,000

  • $50,000

  • $48,000

  • $82,000

5) A summary of a company's plans for which sales, production, distribution targets and financing activities are laid out is known as a master budget.

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