Reference no: EM133158236

Questions -

Q1. Graham Corporation's budgeted production schedule, by quarters, for the coming year is as follows:

Quarter 1 = 40,500 units

Quarter 2 = 37,000 units

Quarter 3 = 35,000 units

Quarter 4 = 42,000 units

Each unit of product requires two pounds of direct material. The company's policy is to begin each quarter with 30% of that quarter's direct materials production requirements.

Graham expects to have 68,000 pounds of direct materials on hand at the beginning of Quarter 1. What would be Graham's budgeted direct materials purchases (in pounds) for the first quarter?

A) 13,000 pounds.

B) 35,200 pounds.

C) 37,300 pounds.

D) 90,200 pounds.

E) 103,200 pounds.

Q2. Regis Company manufactures plugs at a cost of $43 per unit, which includes $7 of fixed overhead. Regis needs 30,000 of these plugs annually (as part of a larger product it produces). Orlan Company has offered to sell these units to Regis at $44 per unit. If Regis decides to purchase the plugs, $60,000 of the annual fixed overhead cost will be eliminated, and the company may be able to rent the facility previously used for manufacturing the plugs.

If the plugs are purchased and the facility rented, Regis Company wishes to realize $100,000 in net savings annually. To achieve this goal, the minimum annual rent on the facility must be:

A) $280,000.

B) $130,000.

C) $160,000.

D) $100,000.

E) $370,000.