Question

Q1 Marst Corporation's budgeted production in units and budgeted raw materials purchases over the next three months are given below:

	January			February		March
Budgeted production (in units)	70,200			?		81,000
Budgeted raw materials purchases (in pounds)	221,160			154,600		159,800

Four pounds of raw materials are required to produce one unit of product. The company wants raw materials on hand at the end of each month equal to 30% of the following month's production needs. The company is expected to have 84,240 pounds of raw materials on hand on January 1. Budgeted production for February should be:

Garrison 16e Rechecks 2017-11-01

rev: 11_19_2018_QC_CS-148529

Multiple Choice

• a) 57,200 units

• b) 81,600 units

• c) 81,000 units

• d) 20,500 units

Q2 Dilly Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow:

• Sales are budgeted at $297,000 for November, $317,000 for December, and $217,000 for January.
• Collections are expected to be 70% in the month of sale and 30% in the month following the sale.
• The cost of goods sold is 75% of sales.
• The company desires to have an ending merchandise inventory at the end of each month equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $21,800.
• Monthly depreciation is $24,500.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	28,500
Accounts receivable		80,500
Merchandise inventory		184,900
Property, plant and equipment, net of $624,000 accumulated depreciation		1,011,000
Total assets	$	1,304,900
Liabilities and Stockholders' Equity
Accounts payable	$	243,000
Common stock		747,000
Retained earnings		314,900
Total liabilities and stockholders' equity	$	1,304,900

Expected cash collections in December are:

Multiple Choice

• a) $317,000

• b) $89,100

• c) $311,000

• d) $221,900

Q3 Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow:

• Sales are budgeted at $350,000 for November, $330,000 for December, and $320,000 for January.
• Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
• The cost of goods sold is 75% of sales.
• The company would like to maintain ending merchandise inventories equal to 80% of the next month's cost of goods sold. Payment for merchandise is made in the month following the purchase.
• Other monthly expenses to be paid in cash are $24,100.
• Monthly depreciation is $15,100.
• Ignore taxes.

Balance Sheet October 31
Assets
Cash	$	20,100
Accounts receivable		70,100
Merchandise inventory		210,000
Property, plant and equipment, net of $572,100 accumulated depreciation		1,094,100
Total assets	$	1,394,300
Liabilities and Stockholders' Equity
Accounts payable	$	254,100
Common stock		820,100
Retained earnings		320,100
Total liabilities and stockholders' equity	$	1,394,300

The cost of December merchandise purchases would be:

Garrison 16e Rechecks 2017-10-03, 2018-07-24

Multiple Choice

• $262,500

• $192,000

• $241,500

• $247,500