Question

Question 1:

Kenner Company produces two products: SR200 and TX500. Budgeted sales for four months are as follows:

​	SR200	TX500
May	8,000	20,000
June	13,000	32,000
July	11,000	39,000
August	18,000	46,000

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Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next month's sales in ending inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.
TX500 requires 6 units of component A. (SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1. Kenner wants to have 20% of the following month's production needs in inventory for Component A. What is the budgeted amount of component A to be purchased in May?

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	a.	66,600
	b.	142,800
	c.	154,560
	d.	164,600
	e.	41,760

Question 2:

1. A company anticipates selling $200,000 of goods, of which $15,000 will probably be uncollectible. Which of the following statements is true?

   	a.	$15,000 does not appear on the cash budget.
   	b.	$215,000 is added to the cash budget.
   	c.	$15,000 is subtracted from the cash budget.
   	d.	$185,000 appears as a disbursement on the cash budget.
   	e.	None of these.

Answer 1

Budgeted amount of Component A to be purchased in May- С. 154,560 Product TX500 May June July August Budgeted Sales units Add: Closing inventory 40% of next month sales 20,000 12,800 32,000 15,600 39,000 18,400 46,000 (32000*40%) (390004096) (46000*40% Less: Opening invento Units to be produced Component A required per unit Total Compnonet A required for production 9,000 12,800 34,800 15,600 41,800 18,400 23,800 142,800 208,800 250,800 Add: Closing inventory of Component A (20% of the next month production needs) 41,760 50,160 ( 208800*20% ( 250800* 20% Less: Opening inventory of Component A 30,000 41,760 50,160 Component A purchased 154,560 217,200 a. $15,000 does not appear on the cash budget. (cash budget only includes the amount collected in cash. As 15,000 will be uncollectible, it does not appear on the cash budget.)