Petrini Corporation Makes One Product and It Provided the Following

question 227

Multiple Choice

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit.
B. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
C. The ending finished goods inventory equals 30% of the following month's sales.
D. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound.
E. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month.
F. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours.
G. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour.
H. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000.
The budgeted required production for February is closest to:

• A) 11,020 units
• B) 14,200 units
• C) 10,600 units
• D) 17,380 units

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Definitions:

Horizontal Axis

In a graph or chart, it is the x-axis, representing the independent variable.

Equilibrium Quantity

Equilibrium quantity is the quantity of goods or services that is supplied and demanded at the equilibrium price, where the quantity supplied equals the quantity demanded.

Cross Elasticity

A measure of the responsiveness of the demand for one good to a change in the price of another good.

Soft Drinks

Carbonated, non-alcoholic beverage options often flavored with various sweeteners, fruits, or other flavorings.