Question

The following information pertains to Tiffany Company:

               Month                      Sales                         Purchases

               January                  $30,000                         $16,000

               February                $40,000                         $20,000

               March                    $50,000                         $28,000

·    Cash is collected from customers in the following manner:

                     Month of sale                      30%

                     Month following the sale    70%

·    40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month.

·    Labor costs are 20% of sales. Other operating costs are $15,000 per month (including $4,000 of depreciation). Both of these are paid in the month incurred.

·    The cash balance on March 1 is $4,000. A minimum cash balance of $3,000 is required at the end of the month. Money can be borrowed in multiples of $1,000.

49.    How much cash will be collected from customers in March?

         a.      $47,000

         b.      $43,000

         c.      $50,000

         d.      None of the above

         e,      $53,000

        

50.    How much cash will be paid to suppliers in March?

         a.      $23,200

         b.      $28,000

         c.      $44,000

         d.      $33,000

         e.      None of the above

51.    How much cash will be disbursed in total in March?

         a.      $21,000

         b.      $25,000

         c.      $44,200

         d.      $48,200

         e.      None of the above

52.     Which of the following manufacturers would most likely use job-order costing?
A. Chemical manufacturers.
B. Microchip processors.

C. Custom-furniture manufacturers.
D. Gasoline refiners.
E. Fertilizer manufacturers.

Answer 1

Solution: Q49 Working March cash collection from Feb sales cash collection from March sales Total cash collection 40000*0.7 28000 50000*0.3 15000 43000 Q50 Working March cash paid for Feb purchase cash paid for March purchase Total cash to supplier 20000*0.6 12000 28000*0.4 11200 23200 Q51 Working March cash to supplier Cash paid for labor cash paid for operating expense Total cash disbursement 23200 50000*0.2 10000 15000-4000 11000 44200 Q52 Which of the following manufacturers would most likely use job-order costing? C. Custom-furniture manufacturers. (Other can be mass produce with identical process hence process costing is most likely to be used by them)