Managerial Accounting

ACCT 3001

Midterm Exam

Name:

Multiple Choice (23 questions @ 2 points each = 46 points)

Please enter the letter corresponding to the best answer on the Multiple Choice Answer Sheet provided.

1.  The budgeted amount of raw materials to be purchased is determined by: 

A. adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule.

B. subtracting the beginning inventory of raw materials from the raw materials needed to meet the production schedule.

C. adding the desired ending inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the beginning inventory of raw materials.

D. adding the beginning inventory of raw materials to the raw materials needed to meet the production schedule and subtracting the desired ending inventory of raw materials.

2.  Walsh Company expects sales of Product W to be 60,000 units in April, 75,000 units in May and 70,000 units in June. The company desires that the inventory on hand at the end of each month be equal to 40% of the next month's expected unit sales. Due to excessive production during March, on March 31 there were 25,000 units of Product W in the ending inventory. Given this information, Walsh Company's production of Product W for the month of April should be: 

A. 60,000 units

B. 65,000 units

C. 75,000 units

D. 66,000 units

3.  The Willsey Merchandise Company has budgeted $40,000 in sales for the month of December. The company's cost of goods sold is 30% of sales. If the company has budgeted to purchase $18,000 in merchandise during December, then the budgeted change in inventory levels over the month of December is: 

A. $6,000 increase

B. $10,000 decrease

C. $22,000 decrease

D. $15,000 increase

4.  The following data have been taken from the budget reports of Brandon company, a merchandising company.

Forty percent of purchases are paid for in cash at the time of purchase, and 30%...