Section #: The following data apply to questions 1 and 2 XX Co. budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels (in units) are planned for the fiscal year of July 1st, 2016, through June 30th, 2017. (20 marks each) July 1 2016 30,000 8,000 30,000 June 30, 2017 15,000 8,000 5,000 Raw material Work in process Finished goods Three (3) units of raw material are needed to produce each unit of finished product. 1 1. If XX plans to sell 250,000 units during the budgeted year, the number of units it would have to manufacture during the year would be: b. 500,000 units a. 505,000 units. d. none of the above. c. 480,000 units. If 480,000 finished units were to be manufactured during the year, the units of raw material needed to be purchased would be: 2. d. none of the above c. 465,000 units. a. 1,425,000 units. b. 660,000 units (20 marks each) The following data apply to questions 3 and 4: Information pertaining to ZZ Co. sales revenue is presented in the following table: April February March $120,000 280,000 $400,000 $150,000 400,000 $550,000 $160,000 300,000 $460,000 Cash sales Credit sales Total sales month If 480,000 finished units were to be manufactured during the year, the units of raw material needed to be purchased would be: 2. a. 1,425,000 units. b. 660,000 units e. 465,000 units. d. none of the above The following data apply to questions 3 and 4 Information pertaining to ZZ Co. sales revenue is presented in the following table: (20 marks each) April February March Cash sales Credit sales Total sales $150,000 400,000 $550,000 $120,000 280.000 $400,000 $160,000 300,000 $460,000 60% of the credit sales are collected in the month of sale and the remainder in the month following the sale. Cost of purchases of inventory each month are 70 % of the next month's projected total sales. All purchases of inventory are on account; 25 % are paid in the month of purchase, and the remainder is paid in the month following the purchase. 3. Budgeted total cash receipts in April are: d. $328,000. b. $448,000 c. $431,600. a. $437,000. 4. Budgeted AR balance 30th April is: c. $306,250. d. None of the above. b. $358,750. a. $112,000. 5. Budgeting is the common accounting tool companies use for planning and controlling. Budgets: a. provide a measure of planned non-financial results. b. focus managers' energies on exploiting opportunities. c. help managers anticipate potential problems. d. enable managers to control through a set of specific activities with defined corrective actions. (20 marks)
