Managerial Accounting

Auditing

Cost Accounting

Intermediate Accounting

3) Lan Corporation had beginning inventory of $42,000 and expects cost of sales of $96,000 units during the month. Desired ending inventory is $31,000. How much inventory should Lan Corporation purchase? A) $65,000 B) $73,000 C) $85,000 D) $107,000 Answer: C Explanation: C) Calculations: $96,000 + $31,000 - $42,000 = $85,000 Diff: 2 LO: 22-3 EOC Ref: E22-14 AACSB: Analytic Skills AICPA Business: Critical Thinking AICPA Functional: Measurement, Reporting 4) Liu Electronics budgeted sales of $400,000 for the month of November; cost of goods sold is equal to 65% of sales. Beginning inventory for November was $80,000 and ending inventory for November should be $72,000. How much are the budgeted purchases for November? A) $252,000 B) $254,800 C) $264,800 D) $265,200 Answer: A Explanation: A) Calculations: ($400,000 × 65%) + $72,000 - $80,000 = $252,000 Diff: 2 LO: 22-3 EOC Ref: E22-14 AACSB: Analytic Skills AICPA Business: Critical Thinking AICPA Functional: Measurement, Reporting 7 Copyright © 2012 Pearson Education 5) Norton Company prepared the following sales budget: Month Budgeted Sales March $200,000 April $180,000 May $220,000 June $260,000 Cost of goods sold is budgeted at 60% of sales, and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 30% of the next month's cost of goods sold. What is the desired beginning inventory on June 1? A) $36,000 B) $39,600 C) $43,200 D) $46,800 Answer: D Explanation: D) Calculations: $260,000 × 60% = $156,000 $156,000 × 30% = $46,800 Diff: 3 LO: 22-3 EOC Ref: P22-22A AACSB: Analytic Skills AICPA Business: Critical Thinking AICPA Functional: Measurement, Reporting 8 Copyright © 2012 Pearson Education 6) Norton Company prepared the following sales budget: Month Budgeted Sales March $200,000 April $180,000 May $220,000 June $260,000 Cost of goods sold is budgeted at 60% of sales, and the inventory at the end of February was $36,000. Desired inventory levels at the end of each month are 30% of the next month's cost of goods sold. How much are the budgeted purchases for the month of March? A) $214,400 B) $123,900 C) $134,400 D) $99,700 Answer: C Explanation: C) Calculations: March April May Jun Sales 200,000 280,000 220,000 260,000 COGS 120,000 168,000 132,000 156,000 COGS 120,000 168,000 132,000 156,000 + End inventory 50,400 39,600 46,800 - Begin inventory (36,000) (50,400) (39,600) Purchases 134,400 157,200 139,200 Diff: 2 LO: 22-3 EOC Ref: P22-22A AACSB: Analytic Skills AICPA Business: Critical Thinking AICPA Functional: Measurement, Reporting 9 Copyright © 2012 Pearson Education

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