Reference no: EM132533807

Question 1: Bandamere Lighting Inc. uses the sales forecast to plan production. The company produces the magnetic light bulb called "Bright-1" one month in advance of the forecasted sale. The January sales forecast of 38 units of these bulbs will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can differ, and the company has precisely calculated that it needs about 18.42% in inventory to accommodate sales above forecast. Raw materials for Bright-1 are acquired the month ahead (in this case, November). Wages are paid in the current month of production (December). Utilities are paid a month after production (January), and shipping is paid a month after the sale (two months after production, February). Finally, an inventory count reveals that there are currently 3 units on hand above the projected sales for November (at the start of November when the raw material order is placed). Unit production costs are $50 for raw materials, $30 for wages, $20 for utilities, and $10 for shipping. Determine the cash outflows for December's production.

A) Raw material of $1,900 paid in November, Wages of $1,140 paid in December, Utilities of $380 paid in January, Shipping of $760 paid in February

B) Raw material of $1,900 paid in November, Wages of $1,000 paid in December, Utilities of $760 paid in January, Shipping of $380 paid in February

C) Raw material of $1,200 paid in November, Wages of $1,140 paid in December, Utilities of $760 paid in January, Shipping of $380 paid in February

D) Raw material of $2,100 paid in November, Wages of $1,260 paid in December, Utilities of $840 paid in January, Shipping of $420 paid in February

Question 2: Buckeye Inc. uses the sales forecast to plan production. The company produces a glow-in-the-dark cup called "Lights-Out" one month in advance of the forecasted sale. The January sales forecast of 20 units of these cups will be scheduled for December production. However, the company also notes that sales forecasts and actual sales can differ, and the company has a policy of having 20% in inventory to accommodate sales above forecast. Raw materials for Lights-Out are acquired the month ahead (in this case, November). Wages are paid in the current month of production (December). Utilities are paid a month after production (January) and shipping is paid a month after the sale (two months after production, February). Finally, an inventory count reveals that there are currently 4 units on hand above the projected sales for November (at the start of November when the raw material order is placed). Unit production costs are $40 for raw materials, $20 for wages, $10 for utilities, and $5 for shipping. Determine the amounts of cash outflows for December's production.

A) Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $200 paid in January, Shipping of $100 paid in February

B) Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $100 paid in January, Shipping of $100 paid in February

C) Raw material of $800 paid in November, Wages of $400 paid in December, Utilities of $200 paid in January, Shipping of $200 paid in February

D) Raw material of $400 paid in November, Wages of $800 paid in December, Utilities of $200 paid in January, Shipping of $100 paid in February

Question 3: Benson Incorporated's cash sales in January are $300,000, its accounts receivable payments for January are $150,000, its beginning cash for January is $75,000, and there are no other cash inflows for January. Its accounts payable payments for January are $200,000 and its wages and salaries for January are $200,000, and its interest payments for January are $10,000. What is its net cash flow for January if there are no other outflows?

A) $50,000

B) $40,000

C) $15,000

D) -$15,000