Question

1) A)

Marlow Company produces hand tools. A production budget for the next four months is as follows: March 10,900 units, April 14,065, May 16,800, and June 21,200. Marlow Company’s ending finished goods inventory policy is 15% of the following month’s sales. Marlow plans to sell 16,700 units in May. What is budgeted ending inventory for March?

2,110

1,635

2,520

2,040

B)

Jared Inc. produces leather handbags. The sales budget for the next four months is: July 5,500 units, August 7,300, September 8,100, October 8,600. Each handbag requires 0.5 square meters of leather. Jared Inc.’s finished goods inventory policy is 10% of next month’s sales needs. Jared Inc.’s leather inventory policy is 20% of next month’s production needs. What will leather purchases be in August? (Do not round intermediate calculations. Round your final answer to the nearest whole number.)

3,767 square meters

3,592 square meters

3,675 square meters

3,617 square meters

C)

Parker Corp., which operates on a calendar year, expects to sell 3,000 units in October, and expects sales to increase 10% each month thereafter. Sales price is expected to stay constant at $10 per unit. What are budgeted revenues for the fourth quarter?

$99,000.00

$99,300.00

$30,000.00

$90,000.00

D)

Jillian Inc. produces leather handbags. The production budget for the next four months is: July 5,800 units, August 7,000, September 7,700, October 8,600. Each handbag requires 2.2 hours of unskilled labor (paid $17 per hour) and 2.4 hours of skilled labor (paid $18 per hour). How much will be paid to skilled labor during the three months July through September?

$369,000

$1,006,560

$885,600

$6,642,000

Answer 1

A.

Estimated sale in April	14,065
Ending finished goods percentage	15%
Ending inventory for March (14,065*15%)	2,110

So, Answer is A. 2,110

B.

	August	September
Budgeted sale in August	7,300	8,100
Add: Ending finished goods inventory	8,100*10% = 810	8,600*10% = 860
Less: Beginning finished goods inventory	7,300*10% = 730	8,100*10% = 810
Number of units to be produced	7,380	8,150
Leather required per unit	0.5	0.5
Total leather required for production	7,380*0.5 = 3,690	8,150*0.5 = 4,075
Add: Ending raw material inventory (4,075*20%)	815
Less: Beginning raw material inventory (3,690*20%)	(738)
Leather to be purchased in August	3,767

Answer is A. 3,767 Squre meters

C.

	October	November	Dcember	Total
Expected sales	3000	3,000*110% = 3,300	3,300*110% = 3,630	9930
Units price	$          10	$                               10	$                               10	$          10
Sales in revenue	$ 30,000	$                      33,000	$                      36,300	$ 99,300

Answer is B.$99,300

D.

	July	August	September	Total
Number of units produced	5,800	7,000	7,700	20,500
Skilled labour hour required per unit	2.4	2.4	2.4	2.4
Total skilled labour hours required	5,800*2.4 = 13,920	7,000*2.4 = 16,800	7,700*2.4 = 18,480	20,500*2.4 = 49,200
Hourly rate	$                                    18	$                                    18	$                                    18	$                                    18
Amount to be paid to skilled labours	13,920*$18 = $250,560	16,800*$18 = $302,400	18,480*$18 = $332,640	49,200*$18 = $885,600

Answer is C. $885,600