Question 1

Dallas Corporation had beginning inventory of 19,500 units and expects sales of 85,000 units during the year. Desired ending inventory is 18,500 units. How many units should Dallas Corporation produce?

Accepted Answer

A)
Sales 85,000
- BI 19,500
Total needed 65,500
+ EI 18,500
= Production 84,000

Question 2

Mockingbird Company expects to sell 5,200 bird perches in January and 9,500 in February for $3 each. What will be the total sales revenue reflected in the sales budget for those months?

Accepted Answer

To calculate the total sales revenue, we need to multiply the number of units sold by the price per unit and then add up the results for both months. 
For January: 
Sales revenue = 5,200 x $3 = $15,600

For February: 
Sales revenue = 9,500 x $3 = $28,500

Total sales revenue = $15,600 + $28,500 = $44,100

Therefore, the correct answer is option B) January $15,600; February $28,500.

Question 3

Goddard's Department Store has budgeted cost of goods sold of $44,000 for its men's shorts in March. Management also wants to have $8,000 of men's shorts in inventory at the end of March to prepare for the summer season. Beginning inventory of men's shorts for March is expected to be $5,500. What dollar amount of men's shorts should be purchased in March?

Accepted Answer

A)
Cost of Goods Sold $44,000
+ EI 8,000
= Goods Available 52,000
Less BI 5,500
= Purchases 46,500

Question 4

Sam's Toys budgeted sales of $300,000 for the month of November and cost of goods sold equal to 80% of sales. Beginning inventory for November was $50,000 and ending inventory for November is estimated at $55,000. How much are the budgeted purchases for November?

Accepted Answer

A)
80 % × $300,000 = $240,000 Cost of Goods Sold
Less BI 50,000
= 190,000
+ EI 55,000
= Purchases $245,000

Question 5

Thomas Corporation recorded sales of $200,000 during March. Management expects sales to increase 5% in April, another 2% in May, and another 10% in June. Cost of goods sold is expected to be 80% of sales. What is the budgeted gross profit for June?

Accepted Answer

A)
$200,000 × 1.05% = 210,000 × 1.02% = 214,200 × 1.10% = $235,620
Now Sales × 80% = Cost of Goods Sold - 188,496 = Gross Profit $47,124

Question 6

CatNap Company has two products: Kittyz and Katz. A March sales forecast projects 20,000 units of Kittyz and 15,000 units of Katz are going to be sold at prices of $15 and $12, respectively. The desired ending inventory of Kittyz is 20% higher than the beginning inventory, which was 2,000 units. How much are total March sales for Kittyz anticipated to be?

Accepted Answer

C)20,000 × $15 = $300,000

Question 7

Piatt Company expects cash sales for July of $15,000, and a 26% monthly increase during August and September. Credit sales of $12,000 in July should be followed by 30% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively?

Accepted Answer

To find budgeted cash sales for September, we need to first calculate the increase in sales from August to September:

26% increase from August to September = 1.26
Budgeted cash sales for August = $15,000 x 1.26 = $18,900
Budgeted cash sales for September = $18,900 x 1.26 = $23,814

To find budgeted credit sales for September, we need to first calculate the increase in credit sales from August to September:

30% increase from August to September = 1.3
Budgeted credit sales for August = $12,000 x 1.3 = $15,600
Budgeted credit sales for September = $15,600 x 1.3 = $20,280

Therefore, the answer is D.

Question 8

Hewitt Company expects cash sales for July of $15,000, and a 22% monthly increase during August and September. Credit sales of $10,000 in July should be followed by 30% increases during August and September. What are budgeted cash sales and budgeted credit sales for September respectively?

Accepted Answer

C)
Cash sales $15,000 × 1.22% = $18,300 × 1.22% = $22,326;
Credit sales $10,000 × 1.30% = $13,000 × 1.30 % = $16,900

Question 9

Fosnight Enterprises prepared the following sales budget:  The expected gross profit rate is 30% and the inventory at the end of February was $10,000. Desired inventory levels at the end of the month are 20% of the next month's cost of goods sold.
What is the desired beginning inventory on June 1?

Accepted Answer

To calculate the desired beginning inventory on June 1, we need to follow these steps:

1. Calculate the cost of goods sold (COGS) for May.

COGS for May = Total sales in May x (100% - Gross profit rate)
COGS for May = $400,000 x 70% = $280,000

2. Calculate the desired inventory levels for June 30.

Desired inventory for June 30 = 20% x COGS for June
Desired inventory for June 30 = 20% x ($500,000 x 70%) = $70,000

3. Calculate the desired inventory for June 1.

Desired inventory for June 1 = Desired inventory for June 30 - Inventory at the end of February + Inventory purchases in March + Inventory purchases in April + Inventory purchases in May
Desired inventory for June 1 = $70,000 - $10,000 + $160,000 + $192,000 + $224,000
Desired inventory for June 1 = $636,000

Therefore, the desired beginning inventory on June 1 is $1,960 (Choice C).

Question 10

Russell Company expects cash sales for July of $15,000, and a 22% monthly increase during August and September. Credit sales of $6,000 in July should be followed by 15% decreases during August and September. What are budgeted cash sales and budgeted credit sales for September?

Accepted Answer

B)
Cash $15,000 × 1.22% = $8,300 × 1.22% = $22,326;
Credit $6,000 × 85% = $5,100 × 85 % = $4,335

Question 11

Rubino Corporation desires a December 31 ending inventory of 900 units. Budgeted sales for December are 2,650 units. The November 30 inventory was 850 units. What are budgeted purchases in units?

Accepted Answer

To determine the budgeted purchases, we need to use the following formula:

Budgeted Purchases = Desired Ending Inventory + Budgeted Sales - Beginning Inventory

Substituting the given values, we get:

Budgeted Purchases = 900 + 2,650 - 850
Budgeted Purchases = 2,700 units

Therefore, the best choice is (C) 2,700.

Question 12

DogDayz Company has two products: Doggyz and Pupz. A March sales forecast projects 22,000 units of Doggyz and 15,000 units of Pupz are going to be sold at prices of $17.50 and $12.00, respectively. The desired ending inventory of Doggyz is 20% higher than the beginning inventory, which was 2,000 units. How much are total March sales for Doggyz anticipated to be?

Accepted Answer

First, we need to calculate the desired ending inventory for Doggyz:

Desired ending inventory = Beginning inventory x (1 + percentage increase)
Desired ending inventory = 2,000 x (1 + 0.20)
Desired ending inventory = 2,400

Next, we can calculate the total sales for Doggyz:

Total Doggyz sales = (Units sold + Desired ending inventory) - Beginning inventory x Unit price
Total Doggyz sales = (22,000 + 2,400) - 2,000 x $17.50
Total Doggyz sales = $385,000

Therefore, the best choice is B, which is $385,000.

Question 13

SportSupplies Corporation has budgeted purchases of inventory for December of $140,000. Expected beginning inventory on December 1 and ending inventory on December 31 are $90,000 and $120,000, respectively. If cost of goods sold averages 88% of sales, what are budgeted sales for December?

Accepted Answer

A)
BI $90,000
+ Purchases 140,000
= Goods Available 230,000
Less: EI 120,000
= Cost of Goods Sold $110,000
Now 88% × (Sales)= $110,000
Sales = $125,000

Question 14

Meers Corporation had beginning inventory of 21,000 units and expects sales of 76,500 units during the year. Desired ending inventory is 19,500 units. How many units should Meers Corporation produce?

Accepted Answer

C)
Sales 76,500
- BI 21,000
Total needed 55,500
+ EI 19,500
= Production 75,000

Question 15

Kotrick Company has beginning inventory of 15,000 units and expected sales of 23,000 units. If the desired ending inventory is 18,000 units, how many units should be produced?

Accepted Answer

To determine the number of units that should be produced, we can use the formula:

Production = Expected Sales + Desired Ending Inventory - Beginning Inventory

Plugging in the numbers, we get:

Production = 23,000 + 18,000 - 15,000 
Production = 26,000

Therefore, the company should produce 26,000 units.

Question 16

Bruner Stores wants to have 500 shovels in ending inventory on December 31. Budgeted sales for December are 1,950 shovels. The November 30 inventory was 320 shovels. How many shovels should Benson Stores purchase for December?

Accepted Answer

D)
Sales 1,950
Less: BI 320
= Need to produce 1,630
+ desired EI 500
= Total Production 2,130

Question 17

McCoy Company wants to have an ending inventory of 7,000 units. McCoy Company has beginning inventory of 9,000 units and expects to sell 33,000 units. How many units should McCoy Company produce?

Accepted Answer

A)
Sales 33,000
Less: BI 9,000
= Need to produce 24,000
+ desired EI 7,000
= Total Production 31,000

Question 18

Loyal Pet Company expects to sell 5,000 beefy dog treats in January and 9,000 in February for $3 each. What will be the total sales revenue reflected in the sales budget for those months?

Accepted Answer

To calculate the total sales revenue, we multiply the number of beefy dog treats sold by the price of each treat and add the sales revenue for each month.

For January: 
5,000 beefy dog treats x $3 per treat = $15,000

For February: 
9,000 beefy dog treats x $3 per treat = $27,000

Therefore, the total sales revenue for January and February will be:
$15,000 + $27,000 = $42,000.

Thus, choice A is correct.

Question 19

Crafty Carpentry Company produces and sells a shelf for $25 each. The beginning inventory is 2,000 shelves, and the desired ending inventory is 2,200 shelves. If budgeted production is 12,500 shelves, what is the forecasted sales revenue from the shelves?

Accepted Answer

B)
Production 12,500
+ BI 2,000
Total Produced 14,500
Less: EI 2,200
Unit Sales 12,300 × $25 = $307,500

Question 20

Willard's Department Store has budgeted cost of goods sold of $42,000 for its men's shorts in March. Management also wants to have $7,600 of men's shorts in inventory at the end of March to prepare for the summer season. Beginning inventory of men's shorts for March is expected to be $5,500. What dollar amount of men's shorts should be purchased in March?

Accepted Answer

The formula to find the amount of inventory to purchase is:

Cost of goods sold + desired ending inventory - beginning inventory = inventory to purchase

Plugging in the numbers given:

$42,000 + $7,600 - $5,500 = $44,100

Therefore, the dollar amount of men's shorts that should be purchased in March is $44,100.

Quiz 9: The Master Budget