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Question 2 Tony's Fashions forecasts sales of $310,000 for the quarter ended December 31. The company's...

Question 2

Tony's Fashions forecasts sales of $310,000 for the quarter ended December 31. The company's gross profit rate averages 20% of sales. Inventory as of September 30 is $110,000. If the December 31st inventory is targeted at $50,000, budgeted purchases for the quarter should be:

Multiple Choice

  • $138,000.

  • $172,000.

  • $188,000.

  • $200,000.

  • $248,000.

Ardel Co. budgeted to sell 222,000 units of Zbox in September. Production of one unit of Zbox requires three pounds of aluminum and five pounds of steel powder. The beginning inventory and the desired ending inventory are as follows:

Beginning Inventory Desired Ending Inventory
Zbox 35,000 units 24,000 units
Aluminum 41,000 pounds 34,000 pounds
Steel powder 37,000 pounds 42,000 pounds

How many pounds of steel powder does Ardel Co. need to purchase during September if Ardel plans to manufacture 161,000 units of Zbox in September?

Multiple Choice

  • 769,000 pounds.

  • 800,000 pounds.

  • 805,000 pounds.

  • 810,000 pounds.

  • 841,000 pounds.

Business   Accounting   
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Homework Answers

Answer #1

(1) Budgeted purchases for the quarter should be:

cost of goods sold = Sales - Gross Profit

= $310000 - ($310000 * 20%) = $248000

Ending Inventory + cost of goods sold - Beginning Inventory

$50000 + $248000 - $110000 = $188000

(2) How many pounds of steel powder does Ardel Co. need to purchase during September if Ardel plans to manufacture 161,000 units of Zbox in September?

Ending Inventory of steel power + Units required for production - Beginning Inventory

Units required for production = 161000 units * 5 pound = 805000 pound

42000 pound + 805000 pound - 37000 pound = 810000 pound

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