Hanover Inc Hanover Desires to Have Buckets on Hand at the End

question 39

Multiple Choice

Hanover Inc.sells buckets for $15 each.Budgeted unit sales for 4 months of 2017 are: $$\begin{array} { l l } \text { March } & 26,000 \text { buckets } \\\text { April } & 28,000 \text { buckets } \\\text { May } & 22,000 \text { buckets } \\\text { June } & 25,000 \text { buckets }\end{array}$$ Hanover desires to have buckets on hand at the end of each month equal to 16 percent of the following month's budgeted unit sales.Each bucket requires 3.9 pounds of plastic.At the end of each month, Hanover desires to have 12 percent of production material needs for the next month on hand.The plastic costs $0.40 per pound.How many buckets should Hanover produce during May?

• A)27,040 buckets
• B)31,520 buckets
• C)27,280 buckets
• D)None of the answer choices are correct.

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Definitions:

U.S. GAAP

Generally Accepted Accounting Principles in the United States, a framework of accounting standards, principles, and procedures.

Current Liabilities

Short-term financial obligations that a company is expected to pay within one year or one operating cycle, whichever is longer.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity levels for operating needs.

Total Assets

The sum of all assets owned by a company, indicating the total resources at its disposal.