November 14, 2017 Accounting 2302Name Mini-Test-Chapter 8 (Choose the best answe

Question

November 14, 2017 Accounting 2302Name Mini-Test-Chapter 8 (Choose the best answer for the following) 1. When calculating raw materials purchases, the starting point will be A actual materials purchases from the previous year B. budgeted finished goods inventory. C. budgeted production. E. beginning work in process inventory m's Pastries, Inc. manufactures donuts, which require 0.3 pounds of flour per unit. Jim's production budget for the next four months is as follows: July, 5,000 units; August, 7,000 units; September, 8,000 units; and October, 8 000 units. Themw materials flour ending inventory policy is 25% of the following month's production needs If August planned purchases are $17,400, then what is the approximate cost per pound of flour for August? A. $6.00 B. $7.40. C. $8.00 D. $8.40 E. None of the above. 3. Albertville Ine produces leather handbags. The production budget for the next four months is as follows: July 5,000 units, August 7,000 units, September 7,500 units, October 8,000 units. Each handbag requires 0.5 square meters of leather. Albertville Inc's leather inventory policy is 30% of next month's production needs. Leather is expected to cost $5.00 per square meter in June, but increases by 20% in July, what is the expecte cost of leather purchases in July? A. $14,600. B. $15,800. C. $16,200. D. $16.800. E. $18,600. /4. (Tor F) Changes in the sales budget will require changes in the raw matenals inventory budget TofF) _Production requirements for raw materials may possibly exceed purchases of raw mate

Explanation / Answer

1 c) On the basis of sales production is decided and on the basis of production raw material required will be determined. Ans Budgeting Production 2 B) Production in August 7000 Raw Material needed Per Unit 0.3 Pounds of flour Total Raw material=(7000*.3) 2100 Add: Ending Inventory=(8000*25%) 2000 Total Units of Raw material needed=(2100+2000) 4100 Less: Units of beginning Inventory=(7000*25%) 1750 Units of Raw material to be purchased=(4100-1750) 2350 Ans B) Cost of Raw Material to be purchased(given) $ 17,400.00 Raw Material cost per unit=($17400/2350) $            7.40 3) Production in July 5000 Raw Material needed Per Unit 0.5 Square meter of leather Total Raw material=(5000*.,5) 2500 Add: Ending Inventory=(7000*30%) 2100 Total Units of Raw material needed=(2500+2100) 4600 Less: Units of beginning Inventory=(50000*30%) 1500 Units of Raw material to be purchased=(4600-1500) 3100 Ans E Cost of Raw Material to be purchased=(3100*$6) $ 18,600.00 Raw Material cost per unit=($18600/3100) $            6.00 6 June Price of Raw Material=$5 July Price of Raw Material=$5*(1.20)=$6 4) True ,Changes in sales budget would require changes in raw material inventory budget. because sales budget is the starting point if any change in sales, would affect first to production and than to raw material. 5) True: Production requirement of raw material may possibly exceed purchase of raw material,because sometimes Opening Inventory on hand.

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