Question
Q1 Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below: January February March Budgeted production
Q1 Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below:
January | February | March | |||||||
Budgeted production (in units) | 70,200 | ? | 81,000 | ||||||
Budgeted raw materials purchases (in pounds) | 221,160 | 154,600 | 159,800 | ||||||
Four pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 84,240 pounds of raw materials on hand on January 1. Budgeted production for February should be:
Garrison 16e Rechecks 2017-11-01
rev: 11_19_2018_QC_CS-148529
Multiple Choice
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a) 57,200 units
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b) 81,600 units
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c) 81,000 units
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d) 20,500 units
Q2 Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:
- Sales are budgeted at $297,000 for November, $317,000 for December, and $217,000 for January.
- Collections are expected to be 70% in the month of sale and 30% in the month following the sale.
- The cost of goods sold is 75% of sales.
- The company desires to have an ending merchandise inventory at the end of each month equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $21,800.
- Monthly depreciation is $24,500.
- Ignore taxes.
Balance Sheet October 31 | ||||||
Assets | ||||||
Cash | $ | 28,500 | ||||
Accounts receivable | 80,500 | |||||
Merchandise inventory | 184,900 | |||||
Property, plant and equipment, net of $624,000 accumulated depreciation | 1,011,000 | |||||
Total assets | $ | 1,304,900 | ||||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 243,000 | ||||
Common stock | 747,000 | |||||
Retained earnings | 314,900 | |||||
Total liabilities and stockholders' equity | $ | 1,304,900 | ||||
Expected cash collections in December are:
Multiple Choice
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a) $317,000
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b) $89,100
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c) $311,000
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d) $221,900
Q3 Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:
- Sales are budgeted at $350,000 for November, $330,000 for December, and $320,000 for January.
- Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
- The cost of goods sold is 75% of sales.
- The company would like to maintain ending merchandise inventories equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses to be paid in cash are $24,100.
- Monthly depreciation is $15,100.
- Ignore taxes.
Balance Sheet October 31 | ||||||
Assets | ||||||
Cash | $ | 20,100 | ||||
Accounts receivable | 70,100 | |||||
Merchandise inventory | 210,000 | |||||
Property, plant and equipment, net of $572,100 accumulated depreciation | 1,094,100 | |||||
Total assets | $ | 1,394,300 | ||||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 254,100 | ||||
Common stock | 820,100 | |||||
Retained earnings | 320,100 | |||||
Total liabilities and stockholders' equity | $ | 1,394,300 | ||||
The cost of December merchandise purchases would be:
Garrison 16e Rechecks 2017-10-03, 2018-07-24
Multiple Choice
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$262,500
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$192,000
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$241,500
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$247,500
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