Question

......................N E E D E X P L A N A T I ON.................

1. AlbertvilleInc produces leather handbags. The production budget for the nextfour months is: July 5,300 units, August 7,500 units, September7,900 units, October 8,800 units. Each handbag requires 0.7 squaremeters of leather. Albertville Inc’s leather inventory policy is20% of next month’s production needs. On July 1 leather inventorywas expected to be 742 square meters. What will leather purchasesbe in july?

a. 3768 square meters

b. 4018 square meters

c. 5043 square meters

d. 4168 square meters

2. Brimsonhas forecast sales for the next three months as follows: July 4,900units, August 6,400 units, September 7,600 units. Brimson's policyis to have an ending inventory of 40% of the next month's salesneeds on hand. July 1 inventory is projected to be 1,960 units.Monthly manufacturing overhead is budgeted to be $17,600 plus $13per unit produced. What is budgeted manufacturing overhead forAugust?

a.104,040

b.89,440

c.88,440

d.107,040

3.JasmineCompany produces hand tools. A production budget for the next fourmonths is as follows: March 10,500 units, April 13,845, May 16,800,and June 21,700. Jasmine Company’s ending finished goodsinventory policy is 5% of the following month’s sales. Jasmineplans to sell 16,600 units in May. How many units will be sold inApril?

a.14,320

b.14,270

c.13,080

d.13,700

4.AlbertvilleInc produces leather handbags. The production budget for the nextfour months is: July 5,300 units, August 7,500 units, September7,600 units, October 8,400 units. Each handbag requires 0.4 squaremeters of leather. Albertville Inc’s leather inventory policy is25% of next month’s production needs. On July 1 leather inventorywas expected to be 1,300 square meters. What will leather purchasesbe in August?

a. 7450

b. 3010

c. 7525

d. 2860

5. FleetwoodCorp is trying to decide whether to lease or purchase a piece ofequipment needed for the next five years. The equipment would cost$519,000 to purchase, and maintenance costs would be $21,200 peryear. After five years, Fleetwood estimates it could sell theequipment for $100,200. If Fleetwood leases the equipment, it wouldpay $151,200 each year, which would include all maintenance costs.Fleetwood’s hurdle rate is 13%.

(Presentvalue of $1: 0.5428, Present value of annuity of$1:3.5172)

a.Net present value of the cost of purchasing theequipment?

b.Net present value of the cost of leasing the equipment?