1.

1. The company desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit. Seventy-five percent of the credit sales should be collected in the month following the month of sale, with the balance collected in the following month. Variable operating expenses should be 10% of sales and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the variable operating expenses are made during the month the expenses are incurred) In a budget of cash receipts for March, the total cash receipts would be:

   a		$8,200.
   b		$16,000.
   c		$17,800.
   d		$20,200.

2. SPI-K is preparing its cash budget for the upcoming month. The beginning cash balance for the month is expected to be $12,000. Budgeted cash receipts are $84,000, while budgeted cash disbursements are $72,000. SPI-K wants to have an ending cash balance of $40,000. The excess (deficiency) of cash available over disbursements for the month would be

   a		$24,000.
   b		$(24,000).
   c		$112,000.
   d		$168,000.

3. If sales and average operating assets remain the same, a company's return on investment will:

   a		increase if net operating income increases.
   b		decrease if net operating income decreases.
   c		increase if margin decreases.
   d		decrease if margin increases.