3.) Heedy Company is trying to decide how many units of merchandise to produce each month. The company policy is to have 20% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 30,000 units, 20,000 units, and 40,000 units, respectively. The number of units that must be produced in September is

a.18,000 units

b.22,000 units

c.28,000 units

d.24,000 units

4.) Production and sales estimates for May for Cardinal Co. are as follows:

Estimated inventory (units), May 1	18,300
Desired inventory (units), May 31	20,000
Expected sales volume (units):
Territory W	7,000
Territory X	8,600
Territory Y	7,900
Unit sales price	$13.00

The number of units expected to be sold in May is

a.21,150

b.14,900

c.28,200

d.23,500

5.) For March, sales revenue is $1,000,000, sales commissions are 5% of sales, the sales manager's salary is $80,000, advertising expenses are $65,000, shipping expenses total 1% of sales, and miscellaneous selling expenses are $2,100 plus 1% of sales. Total selling expenses for the month of March are

a.$205,000

b.$217,100

c.$142,100

d.$207,100

6.) Nuthatch Corporation began its operations on September 1 of the current year. Budgeted sales for the first three months of business September, October, and November are $260,000, $375,000, and $400,000, respectively. The company expects to sell 30% of its merchandise for cash. Of sales on account, 80% are expected to be collected in the month of the sale and 20% in the month following the sale.

The cash collections expected in October from accounts receivable are estimated to be

a.$210,000

b.$294,500

c.$246,400

d.$262,500

7.) As of January 1 of the current year, Grackle Company had accounts receivable of $50,000. The sales for January, February, and March were $120,000, $140,000, and $150,000, respectively. Of each month's sales, 20% are for cash. Of the remaining 80% (the credit sales), 60% are collected in the month of sale, with the remaining 40% collected in the following month. The total cash collected (both from accounts receivable and cash sales) in the month of February is

a.$133,600

b.$129,600

c.$62,400

d.$91,200

Finch Company began its operations on March 31 of the current year. Finch has the following projected costs:

	April	May	June
Manufacturing costs*	$160,000	$196,000	$216,000
Insurance expense**	960	960	960
Depreciation expense	2,080	2,080	2,080
Property tax expense***	550	550	550

*Of the manufacturing costs, three-fourths are paid for in the month they are incurred; one-fourth is paid in the following month. **Insurance expense is $960 a month; however, the insurance is paid four times yearly in the first month of the quarter, (i.e., January, April, July, and October). ***Property tax is paid once a year in November.

8.) The cash payments for Finch Company expected in the month of June are

a.$49,000

b.$211,000

c.$260,000

d.$162,000

Production and sales estimates for June for Robin Co. are as follows:

Estimated inventory (units), June 1	8,000
Desired inventory (units), June 30	9,000
Expected sales volume (units):
Territory X	4,000
Territory Y	10,000
Territory Z	6,000
Unit sales price	$25

9.) The budgeted total sales for June is

a.$525,000

b.$200,000

c.$225,000

d.$500,000

10.) The budgeting process does not involve which of the following activities?

a.periodic comparison of actual results to goals

b.execution of plans to achieve goals

c.establishment of specific goals

d.increased marketing efforts to boost sales