1) At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004?
A. $57,525
B. $63,525
C. $42,350
D. $63,000
2) Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month's sales as ending inventory. How many units should Waco produce during June?
A. 18,900
B. 19,100
C. 19,000
D. 21,000
3) Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and a half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April?
A. $12,500
B. $25,000
C. $27,500
D. $13,750
4) Prices are set by the competitive market when
A. the product is specially made for a customer
B. a company can effectively differentiate its product from others
C. a product is not easily distinguished from competing products
D. there are no other producers capable of manufacturing a similar item
5) A company must price its product to cover its costs and earn a reasonable profit in
A. all cases
B. the long run
C. the short run
D. its early years
6) The cost-plus pricing approach's major advantage is
A. it considers customer demand
B. it is simple to compute
C. it can be used to determine a product's target cost
D. that sales volume has no effect on per unit cost