General Manufacturing expects to have 45,000 pounds of raw materials inventory on hand on June 30, the end of the current year. The company has budgeted the following production for the first four months of the coming year:

	July	August	September	October
Production (units)	105,000	125,000	155,000	115,000

General Manufacturing desires each month's ending raw materials inventory to be 20% of the following month's production needs. A finished unit requires three pounds of raw materials. General Manufacturing's budgeted purchases of raw materials during July (in lbs.) should be:

Multiple Choice

• 75,000 lbs.

• 315,000 lbs.

• 345,000 lbs.

• 390,000 lbs.

• 465,000 lbs.

A boat, costing $110,000 and uninsured, was wrecked the very first day it was used. This boat can either be disposed for $13,000 cash and be replaced with a similar boat costing $113,000, or rebuilt for $98,000 and be brand new as far as operating characteristics and looks are concerned. A relevant cost analysis of the decision to replace the boat shows:

Multiple Choice

• A cost equivalence between the two decision options.

• An $13,000 net advantage associated with the decision to fix the old boat.

• A $2,000 cost advantage associated with the decision to fix the old boat.

• A $23,000 cost advantage associated with the decision to fix the old boat.

• A $4,000 cost advantage associated with the decision to purchase a new boat.

Walman Corp. manufactures products X, Y, and Z from a joint production process. Joint costs are allocated to products based on relative sales values of the products at the split-off point. Additional information is as follows:

	X		Y		Z		Total
Units produced		34,000		30,000		26,000		90,000
Allocated joint costs	$	560,000	$	296,000	$	264,000	$	1,120,000
Sales value at split-off		?		370,000		330,000		1,400,000
Additional costs for further processing		98,000		90,000		62,000		250,000
Sales value if processed further		706,000		603,000		565,000		1,874,000

Based solely on a relevant cost analysis, which of the three products should be processed by Walman beyond the split-off point?

Multiple Choice

• Only X

• Only Y

• Only Z

• Only Y and Z

• All three products: X,Y and Z