1.

1. If a company has a policy of charging its customers 15% above direct materials and direct labour costs, the company:

   a		is a price-setter.
   b		is a price-taker.
   c		can control its production costs.
   d		considers production costs before setting prices.

2. SPKY, a merchandising firm, has budget its activity for December according to the following information: Sales at $550,000, for all cash. Merchandise inventory on November 30 was $300,000. Budgeted Depreciation for December is $35,000. The cash balance at December 1st was $25,000. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash. The planned merchandise inventor yon December 31 is $270,000. The invoice cost for merchandise purchases represents 75% of the sales price. All purchases are paid for in cash. The budgeted cash receipts for December are:

   a		$137,500
   b		$412,500
   c		$550,000
   d		$585,000