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# Abigail's Bake Shop produces cheese bread sticks. The company expects to sell 3,000 packages of the cheese bread sticks in January, 2,800 packages...

1. Abigail’s Bake Shop produces cheese bread sticks. The company expects to sell 3,000 packages of the cheese bread sticks in January, 2,800 packages in February, and 3,200 packages in March. There are 300 packages in the beginning inventory on the first of January. Also, the company wishes to maintain an ending inventory of 10 percent of the next month’s sales.

How many packages should Abigail’s produce in January? (3 points)
How many packages should Abigail’s produce in February? (3 points)

2. Rae’s Bakery makes apple pies. Rae’s Bakery plans to bake 2,000 pies in January and 2,500 pies in February. Each pie requires 2 pounds of baking apples. Baking apples cost \$0.80 per pound. There will be 400 pounds of apples on hand on the first of January. The company wishes to have 500 pounds of baking apples on hand at the end of January and 300 pounds on hand at the end of February.

How many pounds of apples should Rae’s purchase in January? (2 point)
What is the cost in dollars for the required January purchase of apples? (2 point)
How many pounds of apples should Rae’s purchase in February? (2 point)

3. Ruby’s projected budgeted credit sales for the first three months of 2008 are as follows:
January \$250,000
February \$300,000
March \$340,000
Ruby’s expects to collect 30% of the sales dollars in the month of the sale and 70% in the month following the sales.

How much cash does Ruby’s expect to collect in February? (2 point)
How much cash does Ruby’s expect to collect in March? (2 point)

4. Expected manufacturing costs for Robert’s Widgits are as follows:

Variable Costs Fixed Costs per month
Direct Materials \$4.00/unit Supervisory salaries \$100,000
Direct Labor \$2.00/unit Factory overhead \$350,000

Estimate the manufacturing costs if Robert’s produces 100,000 widgits in January. (2 point)

Estimate the manufacturing costs if Robert’s produces 120,000 widgits in February. (2 point)

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