41. Robusto Coffee Traders Inc. sells prepackaged coffees to a variety of businesses throughout the East Coast. Robusto purchases the coffee in bulk from a wholesale distributor and packages the coffee themselves to sell to customers. The company expects to sell 120,000 and 135,000 one-pound packages of coffee during 2012 and 2013, respectively. The company had 6,000 one-pound packages on hand at the beginning of 2012, and the company has a policy of maintaining an ending inventory equal to 5 percent of the packages needed for next year’s expected sales.How many packages of coffee should the company plan to purchase in 2012? A. 126,750B. 120,750C. 119,250D. 255,000
42. Woodsman Inc. produces a variety of wood finishing products including gallons of varnish that it manufactures and packages under its own name. The company has computed the required production of gallons of varnish it will need for the first three months of 2013 as follows:
January
300,000 gallons
February
340,000 gallons
March
400,000 gallons
Each gallon of varnish requires 10 ounces of a special chemical. This chemical costs $.25 per ounce. The company has determined that it needs 20 percent of next month’s raw material needs on hand at the end of each month.The cost of the direct material that should be purchased in February is: A. $920,000B. $950,000C. $880,000D. $850,000
43. Crafty Cathy Products Inc. manufactures a product sold in most craft stores which requires non-soluble glue as one of the key ingredients. The company has already estimated that it needs to produce the following number of units of product for the second quarter of 2013:
April
75,000 units
May
90,000 units
June
84,000 units
Each unit requires .5 ounces of glue at a cost of $.30 an ounce. The company has determined that it needs 15 percent of next month’s raw material needs on hand at the end of each month.The cost of the glue that should be purchased in May is: A. $13,365B. $13,500C. $15,390D. $13,635
44. Carteret Inc.Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
April
6,000 units
May
10,000 units
June
15,000 units
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month’s raw material needs on hand at the end of each month.In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour. Refer to the Carteret Inc. information above. The cost of the rope cord that should be purchased in May is: A. $195,000B. $150,000C. $165,000D. $135,000
45. Carteret Inc.Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
April
6,000 units
May
10,000 units
June
15,000 units
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month’s raw material needs on hand at the end of each month.In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour. Refer to the Carteret Inc. information above. The total cost of direct labor and manufacturing overhead for the month of May is: A. $192,500B. $ 82,500C. $172,500D. $168,750
46. Sellars Inc. manufactures widgets. On June 30, the company had 2,000 widgets in inventory. The company’s policy is to maintain a widget ending inventory equal to 10% of next month’s sales. In addition, each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute.The company expects the following sales activity for the third quarter of the year:
July
25,000 units
August
38,000 units
September
30,000 units
What is the projected direct labor cost for August? A. $55,800B. $57,000C. $61,500D. $58,200
47. Carson Products Inc. manufactures LEDs (light emitting diodes) for use in vehicles. On September 30, the company had 5,000 LED units in inventory. The company’s policy is to maintain a LED ending inventory equal to 25% of next month’s expected sales. In addition, each LED manufactured requires 2 minutes of assembly and inspecting time at a cost of $.30 per minute.The company expects the following sales activity for the fourth quarter of the year:
October
90,000 units
November
100,000 units
December
80,000 units
What is the projected direct labor cost for November? A. $72,000B. $63,000C. $60,000D. $57,000
48. Grisham Products Inc. manufactures engines for small scooters. On September 30, the company had 1,050 engines in inventory. The company’s policy is to maintain an ending inventory equal to 15% of next month’s sales. Each engine manufactured requires 20 minutes of assembly and inspecting time at a cost of $1.50 per minute. Grisham applies overhead to engines at a rate of $2.50 per direct labor minute.The company expects the following sales activity for the fourth quarter of the year:
October
7,000 units
November
14,750 units
December
28,900 units
What is the projected applied manufacturing overhead cost for November? A. $408,125B. $843,625C. $631,375D. $737,500
49. Which of the following statements regarding cash flows is true? A. Many managers consider cash flow budgets to be the least important of all the budgets.B. As long as accounting revenues exceed accounting expenses, cash flow budgets do not have to be prepared.C. It is possible for cash receipts to exceed revenues earned in a given month.D. As long as a manager is confident that there will eventually be a cash receipt from a customer, the timing of the cash receipt is not important.
50. The “Beginning cash balance” would most likely appear on which type of budget? A. Cash receipts budgetB. Summary cash budgetC. Sales budgetD. Cash disbursements budget
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