2 3 4 5 6 7 Q1: Which budget needs to be prepared first? A) S&A budget B) Merchandise purchases budget C) Schedule of expected cash collections from customers D) Sales budget 8 9 10 Q2: At January 1, 2020, Vaughn Inc. has beginning inventory of 3,800 surfboards. Vaughn estimates it 1 will sell 15,400 units during the first quarter of 2020 with a 10% increase in sales each quarter. 12 Vaughn's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. 13 Each surfboard costs $190 and is sold for $300. 14554 16 17 8 9 20 How much is budgeted sales revenue for the third quarter of 2020? A) $1,270,500 B) $5,590,200 C) $4,620,000 D) $5,082,000 Q3: It costs Fortune Company $12 of variable and $5 of fixed costs to produce one bathroom scale 2 which normally sells for $35. A foreign wholesaler offers to purchase 1,000 scales at $16 each. Fortune 3 would incur special shipping costs of $2 per scale if the order were accepted. Fortune has sufficient 4 unused capacity to produce the 1,000 scales. If the special order is accepted, what will be the effect on net income? (2 Marks) 5 6 7 B 9 0 1 2 B 4 5 6 7 6 A) $2,000 increase B) $2,000 decrease C) $3,000 decrease D) $15,000 increase Q4: North Division has the following information: Sales $600,000, Variable expenses $320,000 and Fixed expenses $410,000. If this division is eliminated, the fixed expenses will be allocated to the company's other divisions. What is the incremental effect on net income if the division is dropped? (2 Marks) A) $130,000 increase B) $410,000 decrease C) $280,000 decrease D) $190,000 increase