Figure 8-3
Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.
211. Refer to Figure 8-3. How many units of wood are expected to be used in production during the second month?
a. 12,500 units
b. 10,000 units
c. 15,000 units
d. 12,000 units
600 × 20 = 12,000 units
212. Refer to Figure 8-3. How many units of steel are expected in the material inventory at the end of the second month?
a. 30 units
b. 45 units
c. 40 units
d. 35 units
30 + 5 + 5 = 40 units
213. Refer to Figure 8-3. What is the number of units of wood that need to be purchased by Roaming Vehicles Company during the first month?
a. 1,000 units
b. 9,500 units
c. 500 units
d. 10,000 units
(500 × 20) + 3,500 – 4,000 = 9,500 units
214. Olga’s Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
How much merchandise inventory will Olga’s need to purchase next month?
a. $61,000
b. $60,000
c. $65,000
d. $59,000
$60,000 + $6,000 – $5,000 = $61,000
215. Olga’s Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
The cost of goods sold for next month is expected to be
a. $40,000
b. $60,000
c. $90,000
d. $89,000
$150,000 × 0.40 = $60,000
216. Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production:
Direct materials 3 lb. @ $5 = $15
Direct labor 1 hr @ $6 = $6
Variable overhead 75% of direct labor costs
Fixed overhead 50% of direct labor costs
What is the total amount of overhead included in the overhead budget?
a. $4,500
b. $3,000
c. $11,250
d. $7,500
$6,000 × (0.75 + 0.50) = $7,500
217. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
How much merchandise inventory will Alpha Beta Company need to purchase next month?
a. $29,000
b. $29,500
c. $30,000
d. $30,500
($50,000 × 0.60) + $2,000 – $1,500 = $30,500
218. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
The cost of goods sold for next month is expected to be
a. $29,500
b. $30,500
c. $50,000
d. $30,000
$50,000 × 0.60 = $30,000
219. The following forecasted sales pertain to Shankar Company:
Month Sales
May $200,000
June 250,000
July 150,000
August 100,000
Finished goods inventory as of April 30 4,000 units
The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 30 percent of the next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on July 1?
a. 4,000 units
b. 3,500 units
c. 5,500 units
d. 4,500 units
($150,000/$10) × 0.30 = 4,500 units
220. Colorado Corporation has the following sales forecast for the next quarter:
July, 4,000 units; August, 4,800 units; September, 5,600 units Sales totaled 3,200 units in June. The June ending finished goods inventory was 800 units. End-of-month finished goods inventory levels are planned to be equal to 30 percent of next month's planned sales.
The planned production for Colorado Corporation for July is
a. 3,360 units
b. 4,640 units
c. 1,440 units
d. 5,440 units
4,000 + (0.30 × 4,800) – 800 = 4,640 units
Roaming Vehicles Company manufactures buggies. Manufacturing a buggy takes 20 units of wood and 1 unit of steel. Scheduled production of buggies for the next two months is 500 and 600 units, respectively. Beginning inventory is 4,000 units of wood and 30 units of steel. The ending inventory of wood is planned to decrease 500 units in each of the next two months, and the steel inventory is expected to increase 5 units in each of the next two months.
211. Refer to Figure 8-3. How many units of wood are expected to be used in production during the second month?
a. 12,500 units
b. 10,000 units
c. 15,000 units
d. 12,000 units
600 × 20 = 12,000 units
212. Refer to Figure 8-3. How many units of steel are expected in the material inventory at the end of the second month?
a. 30 units
b. 45 units
c. 40 units
d. 35 units
30 + 5 + 5 = 40 units
213. Refer to Figure 8-3. What is the number of units of wood that need to be purchased by Roaming Vehicles Company during the first month?
a. 1,000 units
b. 9,500 units
c. 500 units
d. 10,000 units
(500 × 20) + 3,500 – 4,000 = 9,500 units
214. Olga’s Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
How much merchandise inventory will Olga’s need to purchase next month?
a. $61,000
b. $60,000
c. $65,000
d. $59,000
$60,000 + $6,000 – $5,000 = $61,000
215. Olga’s Company has a sales budget for next month of $150,000. Cost of goods sold is expected to be 40 percent of sales. All goods are purchased in the month used and paid for in the month following purchase. The beginning inventory of merchandise is $5,000, and an ending inventory of $6,000 is desired. Beginning accounts payable is $38,000.
The cost of goods sold for next month is expected to be
a. $40,000
b. $60,000
c. $90,000
d. $89,000
$150,000 × 0.40 = $60,000
216. Moriah Manufacturing Company expects to incur the following per unit costs for 1,000 units of production:
Direct materials 3 lb. @ $5 = $15
Direct labor 1 hr @ $6 = $6
Variable overhead 75% of direct labor costs
Fixed overhead 50% of direct labor costs
What is the total amount of overhead included in the overhead budget?
a. $4,500
b. $3,000
c. $11,250
d. $7,500
$6,000 × (0.75 + 0.50) = $7,500
217. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
How much merchandise inventory will Alpha Beta Company need to purchase next month?
a. $29,000
b. $29,500
c. $30,000
d. $30,500
($50,000 × 0.60) + $2,000 – $1,500 = $30,500
218. Alpha Beta Company has a sales budget for next month of $50,000. Cost of goods sold is expected to be 60 percent of sales. All goods are purchased in the month used and paid for in the month following their purchase. The beginning inventory of merchandise is $1,500 and an ending inventory of $2,000 is desired. Beginning accounts payable is $13,000.
The cost of goods sold for next month is expected to be
a. $29,500
b. $30,500
c. $50,000
d. $30,000
$50,000 × 0.60 = $30,000
219. The following forecasted sales pertain to Shankar Company:
Month Sales
May $200,000
June 250,000
July 150,000
August 100,000
Finished goods inventory as of April 30 4,000 units
The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 30 percent of the next month's sales.
What is the budgeted beginning balance in units for finished goods inventory on July 1?
a. 4,000 units
b. 3,500 units
c. 5,500 units
d. 4,500 units
($150,000/$10) × 0.30 = 4,500 units
220. Colorado Corporation has the following sales forecast for the next quarter:
July, 4,000 units; August, 4,800 units; September, 5,600 units Sales totaled 3,200 units in June. The June ending finished goods inventory was 800 units. End-of-month finished goods inventory levels are planned to be equal to 30 percent of next month's planned sales.
The planned production for Colorado Corporation for July is
a. 3,360 units
b. 4,640 units
c. 1,440 units
d. 5,440 units
4,000 + (0.30 × 4,800) – 800 = 4,640 units
