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1. Martin Company had finished goods inventory of 55,000 units on January 1. Its projected sales for next four months were: January - 200,000 units; February - 180,000 units; March - 210,000 units; and April - 230,000 units. Martin Company desires to sustain a desired ending finished goods inventory of 20% of following month's sales.

What would be the budgeted production for March?

a. 298,000

b. 214,000

c. 206,000

d. 256,000

2. O'Neill Co. has $296,000 in accounts receivable on January 1. Budgeted sales for January are $860,000. O'Neill expects to sell 20% of its merchandise for cash. Of remaining 80% of sales on account, 75% are expected to be gathered in the month of sale and remainder following month. January cash collections from sales are:

a. $468,000

b. $984,000

c. $688,000

d. $812,000

3. Kidder Company began its operations on March 31 of present year. Projected manufacturing costs for first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of remainder of manufacturing costs are expected to be paid in month in which they are incurred, with balance to be paid in following month.

Cash payments for manufacturing in month of April are:

a. $96,000

b. $128,000

c. $117,000

d. $156,800

4. When management looks for to achieve personal departmental objectives which may work to detriment of entire company, manager is experiencing:

a. Padding

b. Budgetary slack

c. Goal conflict

d. Cushions

5. Business operated at 100% of capacity during its first month and incurred following costs:

Production Costs (5,000 units):



Direct materials



Direct labor



Variable factory overhead



Fixed factory overhead






Operating expenses:



Variable operating expenses



Fixed operating expenses









Unit manufacturing costs of the period



Unit operating expenses of the period



If 1,000 units remain unsold at end of month and sales total $150,000 for month, determine amount of contribution margin that would be reported on variable costing income statement?

a. $52,000

b. $53,000

c. $54,000

d. $51,400

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M917143

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