A.

You are given the following information related to ABC manufacturing company

MonthBudgeted Sales

March$200,000

April212,000

May204,000

June218,000

July210,000

Besides, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales.

Required:

Prepare a purchase budget for April through June.

B

1. Explain the concept of responsibility accounting and its relation to budgeting.

2. Explain how the choice of the type of responsibility center (cost, revenue, profit, or investment) affects behavior.

3. Discuss the concept of "budgetary slack"

C

Drenning Manufacturing produces flooring material. The monthly fixed costs are $10,000 per month. The unit sales price is $75, and the variable cost per unit is $35. Drenning wishes to earn an operating income of $25,000. Using the contribution margin ratio, calculate the total sales revenue that is needed. (Round intermediate calculations to five decimal places.)

D

Arthur's Plumbing reported the following:

Revenues$4,500

Variable manufacturing costs$ 900

Variable nonmanufacturing costs$ 810

Fixed manufacturing costs$ 630

Fixed nonmanufacturing costs$ 545

Required:

a.Compute contribution margin.

b.Compute contribution margin percentage.

c.Compute gross margin.

d.Compute gross margin percentage and operating income.