Fuson Corporation Makes One Product and Has Provided the Following

question 249

Multiple Choice

Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Credit sales are collected:30% in the month of the sale70% in the following monthRaw materials purchases are paid:30% in the month of purchase70% in the following monthThe ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs.If 40,380 pounds of raw materials are required for production in December, then the budgeted raw material purchases for November is closest to:

• A) 32,280 pounds
• B) 38,556 pounds
• C) 31,380 pounds
• D) 35,418 pounds

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Definitions:

Selling Costs

Expenses directly associated with the marketing and sale of a company's products or services, including advertising, sales commissions, and promotional materials.

Product Cost

The total cost incurred to manufacture a product or to provide a service, including direct materials, labor, and overhead expenses.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

Frosting

A sweet, often creamy glaze made of sugar with liquid (such as water or milk) and sometimes flavored, used to coat or decorate baked goods.