8. (TCO 2) Katie Enterprises reports the year-end information from 20X8 as follows: Sales (70,000 units) $560,000; Cost of goods sold 210,000; Gross margin 350,000; Operating expenses 200,000; Operating income $150,000. Katie is developing the 20X2 budget. In 20X2, the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What is budgeted operating income for 20X2? (Points : 3) $135,160 $145,160 $125,160 $130,160

9. (TCO 2) Hester Company budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1, 20x2, through June 30, 20x3.

July 1, 20x2 June 30, 20x3 Raw material (note) 40,000 10,000 Work in process 8,000 8,000 Finished goods 30,000 5,000 (note) Three units of raw material are needed to produce each unit of finished product.

If Hester Company plans to sell 600,000 units during the 20x2-20x3 fiscal year, the number of units it would have to manufacture during the year would be

(Points : 3)

625,000. 575,000. 540,000. 640,000.

Question 10. 10. (TCO 2) Information pertaining to Brenton Corporation's sales revenue is presented in the following table:

February March April

Cash Sales $160,000 $150,000 $120,000 Credit Sales 300,000 400,000 280,000 Total Sales $460,000 $550,000 $400,000

Management estimates that 5% of credit sales are not collectible. Of the credit sales that are collectible, 60% are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70% of the next month's projected total sales. ll purchases of inventory are on account; 25% are paid in the month of purchase, and the remainder is paid in the month following the purchase.

Brenton's budgeted total cash receipts in April are

(Points : 3)

$448,000. $437,000. $431,600. $328,000.