Question 1

Bright Lights Company produces and sells a lantern for $20 each.The beginning inventory is 2,000 lanterns,and the desired ending inventory is 2,200 lanterns.If budgeted production is 12,500 lanterns,what is the forecasted sales revenue from the lanterns?

Accepted Answer

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Question 2

What is the desired ending inventory on May 31 at Peabody Enterprises?

Accepted Answer

To find the desired ending inventory on May 31, we need to calculate the cost of goods sold and subtract it from the cost of goods available for sale.

(1) Cost of goods available for sale = beginning inventory + purchases = $7,000 + $12,800 = $19,800

(2) Cost of goods sold = 70% x $19,800 = $13,860

(3) Desired ending inventory = cost of goods available for sale - cost of goods sold = $19,800 - $13,860 = $5,940

(4) However, we need to convert this to a physical unit count by dividing by the May 31 unit cost of $3.50 per unit:

$5,940 ÷ $3.50 per unit = 1,680 units

Therefore, the desired ending inventory on May 31 is $5,940 or 1,680 units, which corresponds to answer choice (C).

Question 3

What is the budgeted cost of goods sold for May at Peabody Enterprises?

Accepted Answer

The budgeted cost of goods sold for May is calculated by multiplying the budgeted sales for May ($36,000) by the budgeted cost of goods sold percentage (20%). 
Therefore, budgeted cost of goods sold for May at Peabody Enterprises is $7,200 (36,000 x 0.2 = 7,200).

Question 4

What is the desired beginning inventory on June 1 at Peabody Enterprises?

Accepted Answer

B) Sales = 100% - 40% Gross Profit = 60% Cost of Goods Sold(CGS)
Now: June Sales $14,000 × 60% = 8,400(CGS) × 20% = $1,680

Question 5

Clark Company has beginning inventory of 16,000 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 units to be produced, add the expected sales (23,000 units) to the desired ending inventory (18,000 units) and subtract the beginning inventory (16,000 units). This calculation results in 25,000 units to be produced: $23,000 + 18,000 - 16,000 = 25,000$.

Question 6

Horvath Corporation had beginning inventory of 22,000 units and expects sales of 76,500 units during the year.Desired ending inventory is 19,500 units.How many units should Horvath Corporation produce?

Accepted Answer

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Question 7

Stiller Company expects cash sales for July of $15,000,and a 20% monthly increase during August and September.Credit sales of $10,000 in July should be followed by 25% increases during August and September.What are budgeted cash sales and budgeted credit sales for September respectively?

Accepted Answer

To calculate budgeted cash sales for September, we first need to find out the increase from August to September:
- August cash sales: $15,000 x 1.20 = $18,000
- September cash sales: $18,000 x 1.20 = $21,600

To calculate budgeted credit sales for September, we first need to find out the increase from August to September:
- August credit sales: $10,000 x 1.25 = $12,500
- September credit sales: $12,500 x 1.25 = $15,625

Therefore, the correct answer is B: $21,600 and $15,625.

Question 8

A tire store purchased $3,800 of tires in September.The store had $1,500 of tires on hand at the beginning of September,and expected to have $1,300 of tires at the end of September to cover part of anticipated October sales.What is the budgeted cost of goods sold for September?

Accepted Answer

Bigelow Company budgets payroll at $4,000 per month plus a percentage of monthly sales.The June operating expense budget includes total payroll of $12,000 with budgeted sales of $160,000.Sales for July are budgeted at $180,000 while purchases of inventory for July are budgeted at $95,000.Depreciation and insurance for July are estimated at $1,000 and $600,respectively.Office and administrative expenses related to purchasing inventory are budgeted at 10% of purchases for the month.The purchase of $2,500 in equipment and $1,500 in furniture is expected in July.

Question 9

Lawrence Corporation desires a December 31 ending inventory of 900 units.Budgeted sales for December are 2,650 units.The November 30 inventory was 750 units.What are budgeted purchases in units?

Accepted Answer

To determine the budgeted purchases in units, 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 - 750
Budgeted Purchases = 2,800

Therefore, the best choice is B - 2,800.

Question 10

Beedie Company has two products: Beedlez and Bugz.A March sales forecast projects 20,000 units of Beedlez and 15,000 units of Bugz are going to be sold at prices of $10 and $12,respectively.The desired ending inventory of Beedlez is 20% higher than the beginning inventory,which was 2,000 units.How much are total March sales for Beedlez anticipated to be?

Accepted Answer

A) 20,000 × $10 = $200,000

Question 11

Benson Stores wants to have 500 flashlights in ending inventory on December 31.Budgeted sales for December are 1,950 flashlights.The November 30 inventory was 300 flashlights.How many flashlights should Benson Stores purchase for December?

Accepted Answer

Benson Stores wants to end up with 500 flashlights in inventory on December 31. Since the November 30 inventory was 300 flashlights, this means they will need to purchase enough flashlights to have a total of 1,450 (500 + 950) available for sale in December.

Therefore, the number of flashlights Benson Stores should purchase for December is:

1,450 - 300 = 1,150

However, it's important to remember that this calculation assumes that all 1,950 flashlights will be sold in December. If actual sales end up being lower than this, Benson Stores may end up with more inventory than they planned for.

Question 12

Rong Company expects cash sales for July of $15,000,and a 20% monthly increase during August and September.Credit sales of $6,000 in July should be followed by 10% decreases during August and September.What are budgeted cash sales and budgeted credit sales for September?

Accepted Answer

To find the budgeted cash sales for September, we use the expected 20% monthly increase in sales from July to August and August to September:

July cash sales = $15,000
August cash sales = $15,000 x 1.2 = $18,000
September cash sales = $18,000 x 1.2 = $21,600

To find the budgeted credit sales for September, we use the expected 10% decrease from August to September:

July credit sales = $6,000
August credit sales = $6,000 x 0.9 = $5,400
September credit sales = $5,400 x 0.9 = $4,860

Therefore, the answer is C: $21,600 and $4,860.

Question 13

What are the total purchases budgeted for May at Peabody Enterprises?

Accepted Answer

The answer of What are the total purchases budgeted for...

Question 14

Stuart Corporation recorded sales of $200,000 during March.Management expects sales to increase 5% in April,another 4% 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

- March sales = $200,000 
- Sales increase 5% in April = $200,000 x 1.05 = $210,000 
- Sales increase another 4% in May = $210,000 x 1.04 = $218,400 
- Sales increase another 10% in June = $218,400 x 1.10 = $240,240 
- Cost of Goods Sold = 80% of Sales = $240,240 x 0.80 = $192,192 
- Budgeted Gross Profit for June = Sales - Cost of Goods Sold = $240,240 - $192,192 = $48,048

Question 15

Kayla's Toys budgeted sales of $300,000 for the month of November and cost of goods sold equal to 70% 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

Peabody Enterprises prepared the following sales budget:
 11ea83bb_4a15_159f_9bfb_791f1bd83cfa_TB1765_00_TB1765_00_TB1765_00_TB1765_00_TB1765_00_TB1765_00 The expected gross profit rate is 40% 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.

Question 16

What are the total purchases budgeted for April at Peabody Enterprises?

Accepted Answer

The answer of What are the total purchases budgeted for...

Question 17

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

Accepted Answer

To find the dollar amount of men's suits to be purchased in March, use the formula: Purchases = (Budgeted Cost of Goods Sold + Desired Ending Inventory) - Beginning Inventory. Plugging in the given values: Purchases = ($42,000 + $7,500) - $5,500 = $44,000.

Question 18

Good Doggie Treatz Company expects to sell 5,000 gourmet dog biscuits in January and 9,000 in February for $2 each.What will be the total sales revenue reflected in the sales budget for those months?

Accepted Answer

D) January 5000 × $2 = $10,000; February 9000 × $2 = $18,000

Question 19

MedSupplies Company 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 80% of sales,what are budgeted sales for December?

Accepted Answer

We can use the following formula:
Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold (COGS)
Substituting the given values, we get:
$90,000 + Purchases - $120,000 = COGS
Purchases = $150,000
Next, we can use the following formula to find budgeted sales:
Budgeted Sales = COGS / 0.8
Substituting the values, we get:
Budgeted Sales = $187,500 / 0.8 = $137,500
Therefore, the answer is C, $137,500.

Question 20

Artwell Company wants to have an ending inventory of 7,000 units.Artwell Company has beginning inventory of 8,000 units and expects to sell 33,000 units.How many units should Artwell Company produce?

Accepted Answer

The answer of Artwell Company wants to have an ending...

Quiz 9: The Master Budget and Responsibility Accounting