Question

For the coming month your company estimate sales to be $100,000 and the increase by 5% for two months more. Assume the beggining inventory for the coming month estimated $20,000 and the ending inventory 30% of cost of goods sold, cost of goods sold estimation is 60% of sales. What is the estimated purchases in dollars:___________________

2. Material volume(quantity) variance is the difference between:

a. Standard Price * (Standard quantities - actual quantities)

b. Standard Price * (Standard quantities + actual quantities)

c. Standard Price * Standard quantities - actual quantities

d. Standard Price * Standard quantities - actual quantities * actual price

Answer 1

1) Estimated purchase = Cost of goods sold+Desired ending inventory-Beginning inventory

                                = (100000*60%)+(100000*1.05*60%*30%)-20000

Estimated purchase = 58900

2) Material quantity variance = (Standard quantity-actual quantity) Standard rate

So answer is a) Standard Price * (Standard quantities - actual quantities)