(CMA)Table Top Produces Tables Sold to Discount Stores

question 79

Multiple Choice

(CMA) Table Top produces tables sold to discount stores. The table tops are manufactured in Canada by Table Top, but the table legs are manufactured in a plant in Nogales, Mexico. The assembly department attaches the four purchased table legs to the table top. It takes 20 minutes of labour to assemble a table. The company follows a policy of producing enough tables to insure that 40% of next month's sales are in the finished goods inventory. Table Top also purchases sufficient raw materials to insure that raw materials inventory is 60% of the following month's scheduled production. Table Top's sales budget in units for the next quarter is as follows:
Table Top's ending inventories in units for June 30, 20x5 are:

Assume the required production for August and September is 1,600 and 1,800 units, respectively, and the July 31, 20x5 raw materials inventory is 4,200 units. The number of table legs to be purchased in August is:

• A)6,520 legs
• B)9,400 legs
• C)2,200 legs
• D)6,400 legs

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Definitions:

Warranty Of Merchantability

assures that a product sold by a merchant is fit for the general purpose for which it is sold, meeting a buyer's reasonable expectations.

Conspicuous

Something easily seen or noticed; clearly visible or attracting attention due to its distinctiveness.

Strict Liability

A legal doctrine that holds a party responsible for their actions or products, without the plaintiff having to prove negligence or fault.

Unreasonably Dangerous

A legal term describing a product or condition that poses a significant risk of harm to people or property.