MULTIPLE CHOICE QUESTIONS 28. Bend Company's projected sales budget for the next four months is as follows: Units January 70,000 February 90,000 March April 55,000 65,000 Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units should the company produce in January? a) 106,000 b) 90,000 c) 70,000 d) 78,000 Answer: C Difficulty: Easy Learning Objective: Describe a master budget and explain how it is prepared; explain how operating budgets are prepared. CPA: Management Accounting Bloomcode: Application 29. Bend Company's projected sales budget for the next four months is as follows: Units January 70,000 February90,000 March April 55,000 65,000 Beginning inventory for the year is 27,000 units. Ending inventory for each month should be 30% of the next month's sales. How many units need to be available for sale in February? a) 90,000 b) 106,500 c) 73,500 d) 117,000 Answer: b 30. (Appendix 10A) Conner Company is a medium-sized toy distributor. Experience has shown that 30% of sales are collected within the month of sale, 60% is collected the month after the sale, and 10% is collected two months after the sale. Inventory on hand at the end of a month is to be 70% of the next month's budgeted sales. Cost of goods sold is 50% of the selling price. Payment for purchases is made in the month after purchase. All other costs are paid in the month incurred. Budgeted amounts are as follows: May Sales $10,000 $20,000 S30,000 $30,000 $50,000 $40,000 Wages 1,500 2,500 1,500 Rent 500 500 500 Other 500 500 600 Cash receipts for the month of May are expected to be: a) $30,000 b) $21,000 c) $29,000 d) $22,000 Answer d Difficulty: Medium Learning Objective: Explain how a cash budget is developed. Bloomcode: Application 31. (Appendix 10A) Conner Company is a medium-sized toy distributor. Experience has shown that 30% of sales are collected within the month of sale, 60% is collected the month after the sale, and 10% is collected two months after the sale Inventory on hand at the end of a month is to be 70% of the next month's budgeted sales. Cost of goods sold is 50% of the selling price. Payment for purchases is made in the month after purchase. All other costs are paid in the month incurred. Budgeted amounts are as follows: May Sales $10,000 $20,000 $30,000 $30,000 $50,000 $40,000 Wages 1,500 2,000 2 500