5.

The sales budget for Modesto Corp. shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units. Budgeted purchases of Product A for the year would be:

A. 22,400 units.

B. 20,400 units.

C. 20,000 units.

D. 19,500 units.

E. 12,200 units.

9. Cahuilla Corporation predicts the following sales in units for the coming four months:

	April	May	June	July
Sales in Units	240	280	300	240

Each month's ending finished goods inventory should be 40% of the next month's sales. March 31 finished goods inventory is 96 units. A finished unit requires five pounds of direct material B. The March 31 Raw Materials inventory has 200 pounds of B. Each month's ending Raw Materials inventory should be 30% of the following month's production needs. The budgeted production for May is:

A. 232 units.

B. 168 units.

C. 400 units.

D. 280 units.

E. 288 units.

11.

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales. It estimates that May's ending inventory will consist of 14,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Compute the number of units to be produced that would appear on the company's production budget for the month of June.

A. 290,000.

B. 294,500.

C. 280,500.

D. 280,000.

E. 266,000.

12.

Wichita Industries' sales are 10% for cash and 90% on credit. Credit sales are collected as follows: 30% in the month of sale, 50% in the next month, and 20% in the following month. On December 31, the accounts receivable balance includes $12,000 from November sales and $42,000 from December sales. Assume that total sales for January and February are budgeted to be $50,000 and $100,000, respectively. What are the expected cash receipts for February from current and past sales?

A. $80,500.

B. $71,500.

C. $34,500.

D. $61,500.

E. $59,500.

14.

Which of the following is a benefit derived from budgeting?

A. Budgeting focuses management's attention on past performance.

B. Budgeting avoids needing industry and economic factors in decision making.

C. Budgeting provides a basis for evaluating performance.

D. Budgeting avoids the need for incentives to improve employee performance.

Budgeting eliminates the need for coordination across departments.