Q1 The following are budgeted data:

	January			February		March
Sales in units	16,900			23,800		19,900
Production in units	19,900			20,900		20,000

One pound of material is required for each finished unit. The inventory of materials at the end of each month should equal 25% of the following month's production needs. Purchases of raw materials for February would be budgeted to be:

Garrison 16e Rechecks 2017-10-03

Multiple Choice

• 21,125 pounds

• 20,575 pounds

• 18,225 pounds

• 20,675 pound

Q2 The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,800 direct labor-hours will be required in February. The variable overhead rate is $8.20 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $141,120 per month, which includes depreciation of $18,130. All other fixed manufacturing overhead costs represent current cash flows.

The February cash disbursements for manufacturing overhead on the manufacturing overhead budget should be:

Multiple Choice

• $221,480

• $80,360

• $122,990

• $203,350

Q3 Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $308,000 for November, $328,000 for December, and $228,000 for January.
• Collections are expected to be 65% in the month of sale and 35% in the month following the sale.
• The cost of goods sold is 80% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 70% 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 $22,900.
• Monthly depreciation is $30,000.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	35,500
Accounts receivable		86,000
Merchandise inventory		172,480
Property, plant and equipment, net of $624,000 accumulated depreciation		923,000
Total assets	$	1,216,980
Liabilities and Stockholders' Equity
Accounts payable	$	257,000
Common stock		758,000
Retained earnings		201,980
Total liabilities and stockholders' equity	$	1,216,980

Retained earnings at the end of December would be:

Garrison 16e Rechecks 2017-10-03, 2017-10-31

Multiple Choice

• $199,480

• $254,780

• $201,980

• $223,380