30

Assume the sales budget for April and May is 35,000 units and 37,000 units, respectively. The production budget for the same two months is 32,000 units and 33,000 units, respectively. Each unit of finished goods required 4 pounds of raw materials. The company always maintains raw materials inventory equal to 10% of the following month's production needs. How many pounds of raw material need to be purchased in April?

Multiple Choice

• 128,200

• 132,300

• 128,400

• 130,400

29

Assume a merchandising companys estimated sales for January, February, and March are $106,000, $126,000, and $116,000, respectively. Its cost of goods sold is always 35% of its sales. The company always maintains ending merchandise inventory equal to 20% of next months cost of goods sold. What are the required merchandise purchases for January?

Multiple Choice

• $44,100

• $44,180

• $38,500

• $35,700

28

Assume the following budgeted information for a merchandising company:

• Budgeted sales (all on credit) for November, December, and January are $246,000, $216,000, and $207,000, respectively.
• Cash collections related to credit sales are expected to be 70% in the month of sale, 30% in the month following the sale.
• The cost of goods sold is 70% of sales.
• Each months ending inventory equals 20% of next months cost of goods sold.
• 40% of each months merchandise purchases are paid in the current month and the remainder is paid in the following month.
• Monthly selling and administrative expenses that are paid in cash in the month incurred total $24,000.
• Monthly depreciation expense is $8,000.

The budgeted net operating income for December would be:

Multiple Choice

• $40,800

• $32,800

• $26,892

• $34,892