MULTIPLE CHOICE 1) Mutskic Corporation produces and sells Product BetaC. To guar

ID: 2549772 • Letter: M

Question

MULTIPLE CHOICE 1) Mutskic Corporation produces and sells Product BetaC. To guard against stockouts, the company equires that 30% of the next month's sales be on hand at the end of each month. Budgeted sales of Product BetaC over the next four months are: July August September 90,000 June 60,000 70,000 80,000 Budgeted sales in units Budgeted production for August would be: A) 83,000 units B) 107,000 units C)77,000 units D) 80,000 units 2) The following are budgeted data: April May June Sales (units) 15,000 Production (units) 18,000 19,000 16,000 18,000 Two pounds of material are required for each finished unit. The inventory of materials at the end ofeach month should equal 20% of the following month's production needs. Purchases of raw materials for May should be: A) 39,200 pounds B) 52,000 pounds C) 36,800 pounds D)38,000 pounds 3) Rhett Corporation manufactures and sells dress shirts. Each shirt (unit) requires 3 yards of cloth. Selected data from Rhett's master budget for next quarter are shown below: Budgeted sales (in units) Budgeted production (in units) Desired ending inventory of cloth (in yards) 2 How many yards of cloth should Rhett plan on purchasing in May? April May June 26,000 28,000 32,000 28,000 32,000 36,000 2,100 2,800 3,000 A) 84,700 yards B) 96,700 yards C) 98,100 yards D) 98,800 yards

Explanation / Answer

Budget

August

Budgeted sales (Units)

80,000

Add: Required inventory – Ending

(90,000 x 30%)

27,000

Total needs

1,07,000

Less: Require inventory – beginning

(80,000 x 30%)

24,000

Budgeted production for August

83,000

2) Purchase of raw material for May should be-

May

Required production (Units)

19,000

Raw material required (Units)

Required raw material

38,000

Add: Required raw material – Ending

(20,000 units x 2 p/u x 20%)

6,400

Total raw material required

44,000

Less: Raw material - Beginning

(19,000 units x 2 p/u x 20%)

7,600

Raw materials to be purchased

36,800

3 )How many yards of cloth should Rhett plan on purchasing in May

Total budgeted requirement of cloth for production

May

Budgeted production

32,000

Required Yardage per unit

Add: Desired ending inventory

2,800

Less: Opening inventory

2,100

Purchasing for May

96,700