Acadian’s policy is to have 20% of the following month’s sales in inventory On January

Acadian’s policy is to have 20% of the following month’s sales in inventory. On January 1, inventory equalled 7,500 units. What is February’s production in units?

a.20,000

b.24,000

c.26,500

d.28,000

 

 

 

22.A company plans on selling 400 units. The selling price per unit is $5. The company has 40 units in beginning inventory and would like to have 75 units in ending inventory. How many units should be produced for the coming period?

a.365

b.400

c.435

d.2,000

 

 

 

23.Candace Company produces and sells pillows. It expects to sell 10,000 pillows the coming year, and it had 1,000 pillows in the finished goods inventory at the end last year. Candace would like to complete operations in the coming year with at least 1,250 completed pillows in inventory. There is no ending work-in-process inventory. The pillows sell for $5 each. How many pillows should be produced in the coming year?

a.10,000 pillows

b.10,250 pillows

c.11,000 pillows

d.11,250 pillows

 

 

 

24.Bright Lamp Company manufactures lamps. The estimated lamp sales for the last three months of 2010 are as follows:

MonthSales

October10,000

November14,000

December13,000

 

Finished goods inventory at the end of September was 3,000 units. Ending finished goods inventory is budgeted to equal 25% of the next month’s sales. Bright Lamp expects to sell the lamps for $25 each. January 2011sales are projected at 16,000 lamps. How many lamps should be produced in November?

a.10,500 lamps

b.11,000 lamps

c.13,750 lamps

d.14,000 lamps

 

 

 

25.Watson Corporation manufactures boxes. The estimated number of boxes sold for the first three months of the year is as follows:

MonthSales

January3,000

February4,200

March3,900

 

Finished goods inventory at the end of December was 900 units. Ending finished goods inventory is equal to 20% of the next month’s sales. Watson Corporation expects to sell the boxes for $5 each. April sales are projected at 4,500 boxes. How many boxes should be produced in February?

a.3,900 boxes

b.4,140 boxes

c.4,200 boxes

d.4,260 boxes

 

 

 

26.The following forecasted sales pertain to Micah Company:

MonthSales

April$200,000

May250,000

June150,000

July100,000

 

Collection pattern:

60% in month of sale

40% in month following the sale

 

Accounts receivable as of March 31$35,000

Finished goods inventory as of March 314,000 units

 

The company has a selling price of $10 per unit and expects to maintain ending inventories equal to 20% of the next month’s sales. How many units are expected to be produced in April?

a.19,000 units

b.20,000 units

c.21,000 units

d.25,000 units

 

 

 

27.What is the calculation for the direct materials needed for production?

a.Multiply units to be produced by direct materials per unit.

b.Subtract units to be produced from direct materials per unit.

c.Divide units to be produced by direct materials per unit.

d.Add units to be produced to direct materials per unit.

 

 

 

28.For which of the following organizations is having a production budget most important?

a.retail stores

b.manufacturing firms

c.not-for-profit agencies

d.local government agencies

 

 

 

29.A company requires 200 kg of plastic to meet the production needs of a product. It currently has 20 kg of plastic inventory. The desired ending inventory of plastic is 60 kg. How many kilograms of plastic should be budgeted for purchasing during the coming period?

a.160 kg

b.200 kg

c.240 kg

d.260 kg

 

 

 

30.A company has provided a sales budget for the next four months (January, February, March, and April). It bases its production budget on the sales budget. According to company policy, each month’s ending inventory of finished product must be equal to 25% of the following month’s sales needs. The direct materials purchases budget is based on the production budget. Company policy states that each month’s ending inventory of raw materials must be equal to 10% of the following month’s production needs for raw materials. For how many months can the company prepare direct materials purchases budgets?

a.one month

b.two months

c.three months

d.four months