7. Assume a merchandising company provides the following information from its master budget for the month of May:

Sales	$ 216,000
Cost of goods sold	$ 76,500
Cash paid for merchandise purchases	$ 71,500
Selling and administrative expenses	$ 31,500
Cash paid for selling and administrative expenses	$ 30,400

What is the budgeted net operating income?

Multiple Choice

$6,100

$36,500

$124,100

$108,000

8. Assume a merchandising company provides the following information from its master budget for the month of May:

Cash collections from customers	$ 126,000
Cost of goods sold	$ 91,000
Cash paid for merchandise purchases	$ 86,000
Selling and administrative expenses	$ 28,000
Cash paid for selling and administrative expenses	$ 29,000
Accounts receivable, May 1st	$ 14,000
Accounts receivable, May 31st	$ 22,000

If all of the companys sales are on account, what is the budgeted net operating income for May?

Multiple Choice

$15,000

$30,000

$14,000

$29,000

9. A company's production budget indicates the following production requirements: October, 228,000 units; November 193,000 units, and December, 128,000 units. Each unit of finished goods requires 4 pounds of raw materials that cost $3.25 per pound. The company maintains raw materials inventory equal to 20% of the next month's production requirements. The company pays for 30% of its raw material purchases in the month of purchase. The remainder is paid the next month. The companys accounts payable balance at the end of November is closest to:

Multiple Choice

$1,576,965.

$1,858,272.

$1,765,581.

$1,638,000.

10. Assume the following budgeted information for a merchandising company:

• Budgeted sales (all on credit) for November, December, and January are $250,000, $220,000, and $211,000, respectively.
• Cash collections related to credit sales are expected to be 80% in the month of sale, 20% 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 $26,000.
• Monthly depreciation expense is $10,000.

The budgeted net operating income for December would be:

Multiple Choice

$40,000

$26,940

$36,940

$30,000