Use the Following to Answer Questions

question 70

Multiple Choice

Use the following to answer questions
Hepburn Corporation's sales price is $30 per unit. Unit sales information is presented below:
Management estimates that 2% of credit sales are uncollectible. Of the remaining credit sales, 30 percent are collected in the month of sale and the remainder in the following month. The March 31 ending inventory is 5,500 units, and Hepburn wants to have 10% of the next month's sales in ending finished goods inventory.
-Each finished unit requires 5 units of raw material and raw material can be purchased at $3 per unit.Hepburn wants to have 15% of the next month's needs in ending raw materials inventory.The March 31,raw materials inventory is 40,000 units and Hepburn estimates May production at 58,000 units.What amount should Hepburn budget for raw material purchases for April?

• A)$912,750
• B)$855,000
• C)$790,500
• D)$784,500

---

Definitions:

Excess Demand

A market situation where the quantity demanded of a good exceeds the quantity supplied at a current price, leading to shortages.

Excess Supply

A situation in a market where the quantity of a good supplied is greater than the quantity demanded at the current price.

Excess Demand

A market condition in which the quantity demanded of a good or service exceeds the quantity supplied at a given price, leading to upward pressure on price.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price level, at a specific time.