Question

1. Aloan Co. provides the following sales forecast for the next three months:

	January		February		March
Sales units	3,300		4,500		5,300

The company wants to end each month with ending finished goods inventory equal to 10% of the next month’s sales. Finished goods inventory on December 31 is 330 units. The budgeted production units for January are:

Multiple Choice

• 3,300 units.

• 3,750 units.

• 33 units.

• 3,420 units.

• 3,180 units.

2. Frankie's Chocolate Co. reports the following information from its sales budget:

Expected Sales:	July	$	84,000
	August		104,000
	September		114,000

Cash sales are normally 30% of total sales and all credit sales are expected to be collected in the month following the date of sale. The total amount of cash expected to be received from customers in September is:

Multiple Choice

• $186,800.

• $107,000.

• $72,800.

• $34,200.

• $114,000.

3. The Gardner Company expects sales for October of $253,000. Experience suggests that 40% of sales are for cash and 60% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $69,500. What is the amount of Accounted Receivables on the October 31 budgeted balance sheet?

Multiple Choice

• $101,200.

• $126,500.

• $69,500.

• $75,900.

• $151,800.

Answer 1

1. Budgeted production in January

= Budgeted sales + Desired ending inventory - Beginning inventory available

= 3300 + (4500*10%) - 330

= 3300 + 450 - 330

= 3420 units