Grffiths Company planned to make 500,000 cans of pasta sauce and spend $250,000
ID: 2384691 • Letter: G
Question
Grffiths Company planned to make 500,000 cans of pasta sauce and spend $250,000 on tomatoes during November. However, demand was weak due to increased competition, and only 450,000 cans of pasta sauce were produced. The actual cost incurred was $230,000. Tomato prices were as expected during the period. Which of the following statements would be a fair statement regarding Grffiths' performance on tomato usage?Answer
Grffiths was under flexible budget by $20,000 and did a good job controlling costs.
Grffiths was over budget by $5,000 and did a poor job of controlling costs.
Grffiths' flexible budget for tomatoes for performance evaluation should have been $250,000.
Both a and c are correct
Deng Company expects sales as follows:
January $100,000
February $150,000
March $180,000
April $200,000
Sales are made 20% for cash, and 80% on credit. Credit sales are collected 60% in the month of sale and 40% in the next month. What are cash collections for March?
Answer
$170,400
$180,000
$36,000
$168,000
Explanation / Answer
Grffiths was over budget by $5,000 and did a poor job of controlling costs. $250,000 / 500,000 = 0.50 per can For 450,000 cans 450,000 x 0.50 = $225,000 whereas Grffiths incurred $230,000.
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