E8 - production needs plus target ending inventories c....

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1. Gerdie Company has the following information: Month Budgeted Sales March $50,000 April 53,000 May 51,000 June 54,500 July 52,500 In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's cost of sales. Required: Prepare a purchases budget for April through June. Answer: April May June Total Desired ending inventory $ 9,180 $ 9,810 $ 9,450 $ 9,450 Plus COGS 31,800 30,600 32,700 95,100 Total needed 40,980 40,410 42,150 104,550 Less beginning inventory 9,540 9,180 9,810 9,540 Total purchases $31,440 $31,230 $32,340 $ 95,010 2. The direct materials usage budget is based on: a. the units to be produced during a period b. budgeted sales dollars c. the predetermined factory overhead rate d. the amount of labor-hours worked Answer : a Difficulty : 1 Objective : 3 Terms to Learn : operating budget 3. Direct material purchases equal: a. production needs b.
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Unformatted text preview: production needs plus target ending inventories c. production needs plus beginning inventories d. production needs plus target ending inventories less beginning inventories Answer : d Difficulty : 1 Objective : 3 Terms to Learn : operating budget 4. Individual budgeted amounts included in the manufacturing overhead costs budget are based on input from: a. operating personnel b. costs incurred in prior years c. cost changes expected in the future d. All of these answers are correct. Answer : d Difficulty : 3 Objective : 3 Terms to Learn : operating budget 5. The manufacturing overhead costs budget includes budgeted amounts for: a. direct materials b. direct manufacturing labor c. indirect manufacturing labor d. All of these answers are correct....
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This note was uploaded on 05/20/2010 for the course BUSINESS 06032010 taught by Professor Alberthall during the Spring '10 term at University of the East, Manila.

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E8 - production needs plus target ending inventories c....

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