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Unformatted text preview: . : : : 15/01/2005 ) 04/05 ( .......................................: ...................: ( ) : Question One: Each Multiple choice question has four suggested answers, letter (A), (B), (C), or (D). You should read each question and then decide which choice is best. 1) Questions (1-3). Refer to the following: Compton, Inc. makes and sells a single product, Zippy. Three yards of cotton are needed to make one Zippy. Budgeted production of Zippy for the next five months is as follows: August 14,000 units September 14,500 units October 15,500 units November 12,600 units December 11,900 units. The company wants to maintain monthly ending inventories of cotton equal to 20% of the following month's production needs. On 31 st of July, 2,500 yards of cotton were on hand. The cost of cotton is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the fourth quarter. The total cost of cotton to be purchased in August is : A. 5 40,970. B. 5 48,200. C. 5 33,840. D. 5 42,300. 2) The desired ending inventory of cotton for the month of September is: A. 5 7,560 yards B. 5 8,400 yards C. 5 8,700 yards D. 5 9,300 yards 3) The total needs of cotton for the month of November are: A. 5 37,800 yards B. 5 44,940 yards C. 5 37,380 yards D. 5 45,360 yards 4) Questions (4-6) . Refer to the following: Barton, Inc. has budgeted sales in units for the next five months as follows: June 4,600 units July 7,200 units August 5,400 units September 6,800 units October 3,800 units. Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales in units. The inventory on May 31 contained 400 units. The company needs to prepare a Production Budget for the second quarter of the year. The opening inventory in units for September is : 1 A. 5 380 units B. 5 6,800 units C. 5 540 units D. 5 680 units 5) The total number of units to be produced in July is: A. 5 7,740 units B. 5 7,200 units C. 5 7,020 units D. 5 7,280 units 6) The desired ending inventory for August is: A. 5 540 units B. 5 680 units C. 5 720 units D. 5 380 units 7) Questions (7&8) . Redmond Awnings, a division of Wrapup Corp., has a net operating income of $60,000 and average operating assets of $300,000. The required rate of return for the company is 15%. What is the division's residual income?...
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- Spring '10