Prester Corporation Has Budgeted Production for Next Year as Follows

question 152

Multiple Choice

Prester Corporation has budgeted production for next year as follows:
Two pounds of material A are required for each unit produced. The company has a policy of maintaining a stock of material A on hand at the end of each quarter equal to 25% of the next quarter's production needs for materialA. A total of 30,000 pounds of material A are on hand to start the year. Budgeted purchases of material A for the second quarter would be:

• A)145,000 pounds
• B)140,000 pounds
• C)135,000 pounds

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Definitions:

Debt Securities

Financial instruments representing a loan made by an investor to a borrower, typically involving periodic interest payments and the return of the principal at maturity.

Life Insurance Reserves

Funds that life insurance companies are required to set aside to ensure they can meet future obligations to policyholders.

Pension Reserves

Funds set aside by an organization to meet future pension liabilities for its employees.

Money Market Securities

Short-term financial instruments that are considered relatively safe and liquid, including treasury bills, certificates of deposit, and commercial paper.