Question

___ 3. Archer Company has budgeted sales of

30,000 units in April, 40,000 units in May, and 60,000

units in June. The company has 6,000 units on hand on

April 1. If the company requires an ending inventory

equal to 20% of the following month’s sales, produc-

tion during May should be: a) 32,000 units; b) 44,000

units; c) 36,000 units; d) 40,000 units.

___ 4. Refer to the data for Archer Company in

question 3. Each unit requires 3 pounds of a material.

A total of 24,000 pounds of the material were on hand

on April 1, and the company requires materials on

hand at the end of each month equal to 25% of the fol-

lowing month’s production needs. The company plans

to produce 32,000 units of finished goods in April.

How many pounds of the material should the company

plan to purchase in April? a) 105,000; b) 19,000; c)

87,000; d) 6,000.

___ 5. If the beginning cash balance is $15,000,

the required ending cash balance is $12,000, cash dis-

bursements are $125,000, and cash collections from

customers are $90,000, the company must borrow: a)

$32,000; b) $20,000; c) $8,000; d) $38,000.

Answer 1